Union Bank, Canara Bank, IOB Cut Lending Rates By 50 bps Following RBI Policy Move

New Delhi, Jun 12 (KNN) Union Bank of India, Canara Bank, and Indian Overseas Bank (IOB) have implemented a reduction of 50 basis points (bps) in their external benchmark lending rates, responding to the Reserve Bank of India's policy rate cut announced on Friday. 

The adjustment directly affects retail loans and lending to Micro, Small, and Medium Enterprises (MSME), which are linked to these benchmark rates.

The rate reductions result in repo-linked lending rates of 8.25 percent for both Canara Bank and Union Bank of India, while IOB's rate will stand at 8.35 percent. 

These revised rates became effective from June 11 for Union Bank of India, with Canara Bank and Indian Overseas Bank implementing their changes from June 12.

The banks indicated that the rate cuts will translate into lower borrowing costs for customers with loans tied to the repo-linked lending rate structure. 

Canara Bank noted that borrowers may experience either reduced equated monthly installments or shortened loan tenure periods, depending on their specific loan terms and conditions.

Union Bank of India emphasised that the adjustment brings complete alignment between its external benchmark lending rate and repo-linked lending rate with the central bank's recent policy decision. 

The bank stated that both new and existing borrowers across retail segments, including home loans, vehicle financing, and personal loans, as well as MSMEs, will benefit from the reduced rates.

The coordinated response from these public sector lenders reflects the transmission mechanism of monetary policy changes through the banking system. 

The external benchmark lending rate system, which links loan pricing to policy rates, is designed to ensure more effective transmission of central bank rate decisions to end borrowers across the economy.

(KNN Bureau)