New Delhi: Hours after the Reserve Bank of India (RBI) announced a 25 basis points cut in the repo rate, two major public sector banks -- Bank of India and UCO Bank on Wednesday reduced their lending rates, bringing relief to both existing and new borrowers. 

The RBI’s Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, reduced the key policy rate to 6 per cent from 6.25 per cent earlier in the day.

This marks the second consecutive cut under Malhotra’s leadership and is aimed at supporting economic growth amid rising global challenges, including a steep 26 per cent tariff by the US on Indian exports.

Reacting swiftly to the RBI's move, Bank of India lowered its Repo Based Lending Rate (RBLR) to 8.85 per cent, down from 9.10 per cent.

The new rate came into effect immediately on April 9.

Similarly, UCO Bank also reduced its repo-linked lending rate to 8.8 per cent, with the revised rate effective from Thursday.

Both banks announced the rate cuts through separate regulatory filings, citing the RBI’s latest policy decision as the reason for the revision.

This move is expected to make loans cheaper, encouraging more borrowing by individuals and businesses.

Other banks are likely to follow suit in the coming days, passing on the benefits of the RBI’s rate cut to customers across the country, experts noted.

Governor Malhotra, while announcing the decision, also revealed a shift in the policy stance from ‘neutral’ to ‘accommodative,’ indicating that the central bank is willing to support growth through easier monetary policy.

“Our stance provides policy rate guidance without any direct guidance on liquidity management,” he said.

The RBI has already infused over $80 billion into the banking system in the last two months, along with a rate cut in February -- the first such move in five years. (IANS)