Indian Overseas Bank has decided to pass on the benefit of recent cut Repo Rate by RBI by cutting Repo Linked Lending Rate (RLLR) to 6.85 per cent (i.e. 4% + 2.85% = 6.85%) with effect from July 1, 2020. The current RLLR is 7.25 per cent since April 1.
From October 1, 2019, all new floating rate personal or retail loans such as your car or home loans sanctioned by banks will have to be linked to external benchmarks, which includes RBI’s repo rate.
Every bank will have its own Repo linked lending rate, which will keep varying each time the Central Bank revises the repo rate(the rate at which banks borrow from the RBI).
The move comes after RBI reduced the repo rate by 40 basis points to 4 per cent during its unscheduled monetary policy committee (MPC) meeting in May.
Since then, several state-run banks such as Punjab National Bank (PNB) and Bank of Maharashtra have been slashing their RLLR.