Mumbai: Several major banks, including Punjab National Bank (PNB), Bank of India and UCO Bank, have slashed their lending rates following the Reserve Bank of India's (RBI) recent decision to cut the repo rate by 50 basis points. 

The rate cut is part of the RBI’s strategy to stimulate economic growth by making borrowing more affordable for both consumers and businesses.

Punjab National Bank was among the first to pass on the benefit, lowering its repo-linked lending rate from 8.85 per cent to 8.35 per cent.

However, the bank kept its base rate and marginal cost of lending rate (MCLR) unchanged.

Bank of India followed with a similar reduction, cutting its repo-based lending rate from 8.85 per cent to 8.35 per cent, as per its stock exchange filing.

UCO Bank took a different route, trimming its MCLR by 10 basis points across all loan tenures. The changes, effective from June 10, will make various types of loans -- including home and personal loans -- slightly more affordable.

The bank reduced its overnight MCLR from 8.25 per cent to 8.15 per cent, the one-month MCLR from 8.45 per cent to 8.35 per cent, and the three-month MCLR from 8.6 per cent to 8.5 per cent.

The six-month and one-year MCLRs were lowered to 8.8 per cent and 9 per cent, respectively.

Bank of Baroda also announced a 50 basis point reduction in its repo-linked lending rates for select loan tenures, adding to the list of banks easing borrowing costs.

These rate cuts come in response to the RBI’s move, announced by the Monetary Policy Committee led by Governor Sanjay Malhotra, to lower the repo rate -- a key policy rate at which the RBI lends money to commercial banks.

The objective behind the rate cut is to energise the economy by encouraging spending and investment through cheaper loans.

In addition to the repo rate cut, the RBI also reduced the Cash Reserve Ratio (CRR) by 100 basis points, from 4 per cent to 3 per cent.

This reduction will be rolled out in four phases and is expected to inject Rs 2.5 lakh crore of liquidity into the banking system.

The CRR is the portion of bank deposits that must be maintained with the RBI, and lowering it allows banks to lend more. (IANS)