New Delhi: In a move aimed at boosting economic activity, the Reserve Bank of India (RBI) on Wednesday reduced the repo rate by 25 basis points. The key policy rate now stands at 6 percent, down from 6.25 percent, following a decision by the Monetary Policy Committee (MPC) led by Governor Sanjay Malhotra.

This marks the second straight rate cut under Malhotra’s leadership. The decision comes amid growing global headwinds, including a sharp 26 percent tariff imposed by the United States on Indian exports.

Bank of India and UCO Bank respond quickly

Soon after the RBI announcement, two major public sector banks — Bank of India and UCO Bank — lowered their lending rates, providing immediate relief to borrowers.

Bank of India cut its Repo Based Lending Rate (RBLR) to 8.85 percent from 9.10 percent. The new rate became effective on 9 April.

UCO Bank also revised its repo-linked lending rate, bringing it down to 8.8 percent. The updated rate will be effective from Thursday.

Both banks confirmed the changes through regulatory filings, linking the revisions directly to the RBI’s latest policy update.

Loans to become cheaper

The cuts are expected to reduce borrowing costs for both individuals and businesses, potentially boosting demand for credit. Experts believe that more banks will soon follow suit, passing on the benefits of the rate cut to a wider base of customers.

Shift in policy stance to ‘accommodative’

While announcing the decision, Governor Malhotra said the central bank had also shifted its policy stance from ‘neutral’ to ‘accommodative’.

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

Over the past two months, the RBI has already injected over $80 billion into the banking system. This latest cut follows another reduction in February, which was the first in five years.

IANS