Indian Overseas Bank (IOB) Has given great relief to its customers. The bank has announced a deduction of 50 basis points (0.50%) in the repo linked landing rate (RLR). Now the RLR rate has come down from 8.85% to 8.35%. This decision was taken in the meeting held on 11 June 2025 of the Bank’s Asset Liability Management Committee (ALCO). The new rates have come into force today from 12 June 2025. This decision will benefit the customers whose loans are connected to RLLr. Now new loans will be found cheap and EMI of existing loans will also decrease.
Why did RLR decrease?
This move of IOB has come after the Reserve Bank of India (RBI) after a 0.50% reduction in the recent repo rate. In a meeting chaired by RBI Governor Sanjay Malhotra, the repo rate was reduced from 6% to 5.50%. This is the third consecutive time RBI has cut the repo rate. This decision was taken due to inflation being under control.
Other banks also reduced interest rates
After the RBI’s decision, many other banks have also reduced their loan rates.
Bank of Baroda has also cut RLR by 0.50%.
HDFC Bank has cut 10 basis points in MCLR on all tenures, which will make loans cheap.
Punjab National Bank, UCO Bank and Bank of India have also given relief to their customers.
FD also affects
The reducing repo rate has also affected Fixed Deposit (FD). ICICI Bank, HDFC Bank and Kotak Mahindra Bank have reduced their FD rates. ICICI Bank and HDFC Bank have cut 25 basis points on FDs of less than Rs 3 crore, which has been implemented from 10 June 2025. Kotak Mahindra Bank has changed its FD rates since 9 June 2025.
What does it mean?
When RBI reduces the repo rate, banks get a cheap loan. With this, banks can reduce loan rates. At the same time, FD rates also decrease because banks do not need to raise more money from the general public. Common customers will get direct benefit of cuts in interest rates of many banks including IOB. Taking a loan will be cheaper and the existing loan EMI can also be reduced. However, the interest on FD may decrease slightly. In such a situation, customers should think of investment and loan.
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