Kolkata: A giant step for an individual, a small step for the country’s economy. You can easily turn around the famous words of Neil Armstrong to describe the impact of a home loan. A home loan is not only the biggest financial transaction in the life of an average individual but also has a multiplier effect in the country’s economy since buying a new home has a spiraling effect on several industries such as steel, cement, paint, bricks, home decor items, sanitaryware, electricals, furnishings and furniture, each of which employs a large number of people.
One of the primary objectives of the RBI bringing down the Repo Rate by 50 basis points since February — it is expected to trim it further by at least 75 basis points by march 2026 — is to bring down the cost of funds that would prompt people to consume more and stimulate demand, economic growth and, thereby, employment generation. With its varied linkages, increased sales of dwelling units could lead to that end. Already four major public sector banks have reduced interest rates on home loans. Let’s have a look at these.
The rate cut in big four banks
State Bank of India: India’s largest bank SBI has slashed interest rates on home loans after RBI trimmed rates by 25 basis points earlier this month (on April 9). SBI, which is the largest lender of home loans also slashed its lending rates by up to 0.25%. State Bank of India’s External Benchmark Based Lending Rate (EBLR) has been cut from 8.90% to 8.65%.
Punjab National Bank: PNB or Punjab National Bank is the second-biggest public sector lender in India. It has also reduced its repo linked lending rate by 25 basis points. As a result, the rate of interest that a customer will pay has come down from 9.10% to 8.85%. The breakdown is — Repo Linked Lending Rate (RLLR) has been slashed from 8.90% to 8.65%. Add to this a bank spread of 0.20%, which is a fixed margin and the new rate works out to be 8.85%. The new rate has been effective from April 10, 2025.
Bank of India: Bank of India, or BoI, has also brought down its lending rates by 25 basis points in sync with RBI cut of the Repo Rate by the same amount. The repo-linked benchmark lending rate of BoI now stands at 8.85% (from 9.1%). This decision was taken on April 9, 2025, the same day as the RBI rate cut.
Indian Bank: Indian Bank has decreased its repo linked benchmark rate from 6.25% to 6%. As a result, RBLR now stands at 8.7% from the earlier level of 9.05%. It has come into effect from April 11.
The point to note here is that all banks that have reduced their Repo Rate linked interest rates will be offering lower rates on all loans that are linked with the Repo Rate. The reduced rates will not be implemented only in the case of home loans.
The two consecutive rate cuts of 25 basis points each by the Reserve Bank of India in February and April has sparked off a slashing of lending rates by major public sector banks. The first blush of declining rates are already visible in the high impact home loan sector. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
