icon info@indiaipo.in
“IPO Service From Education To Execution”
icon
+91-96506-37280
011-47008280
Connect now
Check IPO Feasibility
shape
RBI asks all banks to ensure 50 bps rate cuts are passed on to customers swiftly

SBI, Bank of Baroda, and HDFC Bank are among the lenders that have already passed on the benchmark lending rate-linked interest rate to borrowers by 50 bps.

RBI asks all banks to ensure 50 bps rate cuts are passed on to customers swiftly

RBI Urges Banks to Speed Up Interest Rate Cuts

Following a significant 50 basis point repo rate cut, the Reserve Bank of India (RBI) is urging banks to swiftly lower their interest rates. A recent report in the central bank's June 2025 bulletin highlights favorable financial conditions, making efficient transmission of rate cuts entirely feasible.

Speedy Action Needed: While many banks, including SBI, Bank of Baroda, and HDFC Bank, have already adjusted their lending rates following the June 6th repo rate cut, the RBI emphasizes the need for accelerated action across the board.

  • Significant Rate Cuts: The RBI's February and April cuts have already been implemented by numerous lenders.
  • Benchmark Rate Alignment: The report notes that repo-linked external benchmark-based lending rates (EBLRs) and marginal cost of funds-based lending rates (MCLRs) reflect the 50-bps policy repo rate reduction.

CRR Reduction: Further supporting this initiative, the RBI also announced a 100 bps reduction in the cash reserve ratio (CRR) to 3 percent of net demand and time liabilities (NDTL). This will inject approximately ₹2.5 lakh crore into the banking system by December 2025, reducing banks' funding costs and bolstering monetary policy transmission.

Impact on Lending and Deposit Rates: The report details the impact of these changes:

  • Weighted Average Lending Rate (WALR): A 6 bps decrease on fresh rupee loans and 17 bps on outstanding loans between February and April 2025.
  • Weighted Average Domestic Term Deposit Rates (WADTDRs): A 27 bps moderation on fresh deposits and 1 bps on outstanding deposits during the same period.
  • Public vs. Private Banks: Transmission of rate cuts showed marginal differences between public sector banks (PSBs) and private sector banks (PVBs), with PSBs showing slightly higher reductions in fresh loan rates and PVBs showing greater decreases in outstanding loan rates. PSBs also reduced fresh term deposit rates more significantly than PVBs.

Disclaimer: The RBI clarifies that the views expressed in the bulletin article are solely those of the authors and do not necessarily represent the official stance of the Reserve Bank of India.