New Delhi40 minutes ago
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Loans of four public sector banks have become cheap. After 0.50% reduction in the repo rate by RBI, these public sector banks have also reduced their repo linked lending rate (RLR) by 0.50%. This includes Bank of Baroda, Punjab National Bank, UCO Bank and Bank of India.
Punjab National Bank said that its home loan rate will start from 7.45%. Earlier this rate used to start at 8%. At the same time, the interest rate of vehicle loan will now start from 7.80%. The other three banks have not yet updated their new rates. Just gave information about reducing RLR.
After the latest cuts, EMI will decrease Rs 1017 on PNB’s 20 -year loan of ₹ 30 lakh. Similarly, EMI will decrease Rs 1139 on a 30 -year loan of ₹ 30 lakh. Both new and existing customers will benefit from this.
Bank of Baroda reduced RLR to 8.35%
- Bank of India has its own from 6 June Rlr Has reduced 0.50% to 8.35%.
- Bank of Baroda has its own from 7 June Rlr Has reduced 0.50% to 8.15%.
- PNB has reduced its RLR from 0.50% to 8.35% from 9 June.
- UCO Bank has reduced it by 0.50% in its RLLR from 9 June to 8.30%.
This interest rate deduction will benefit all those whose loans are connected to RLR …
For new loans takers: If you are thinking of taking a new home loan, auto loan, now you have to pay less interest. For example, the interest rate of the new home loan in Bank of Baroda used to start at 8% earlier, now it will be reduced to about 7.50%.
For old loans: Those who have already taken floating rate home loan related to RLLR, their interest rate will also be reduced in the next reset period. This will either reduce their EMI, or the loan duration will decrease. If the loan is connected to a fixed rate, then you will not get the benefit.
If the repo rate is low, RLR also decreases
Banks fix their loan interest rate based on RLR. If the repo rate is low, the RLR also decreases, and the interest rates of the loan also decrease. The bank adds a margin above the repo rate in the RLR, so that their expenses and profits can be covered.
Example:
- Suppose the repo rate of the Reserve Bank is 5.50% and the bank adds 2.65% margin, then the RLR will be 8.15%.
- Credit risk premium is added to the RLLR to fix the interest rate, which is based on the credit profile.
- If the RLR is 8% and your credit risk premium is 0.5%, then your home loan interest rate will be 8.5%.
Now answers to two important questions …
1. Will there be equal benefit on both old and new loans?
According to RBI rules, it is necessary to reset the floating rate loan from time to time according to the repo rate. This means that the interest rate of those who have already taken the loan will automatically reduce, because the bank has to pay the benefit of decreasing the repo rate.
However, those taking new loans may not get full benefit. This is because banks can increase the extra margin above the repo rate to save their profits.
2. Can you switch to floating with old loan fixed?
If your loan is connected to MCLR or fixed rate, you can talk to the bank and switch it to RLR. However, some fees may have to be paid for this. If your loan is currently in the initial years, switching can save interest in a long time.
RBI had reduced the repo rate by 0.50% to 5.50%
The RBI had reduced the repo rate from 0.50% to 5.50%. The decision to cut this deduction was taken in the meeting of the Monkey Policy Committee from June 4 to 6. RBI Governor Sanjay Malhotra gave this information on 6 June.
Repo rate reduced by 3 times this year, 1% cut
The RBI had reduced the interest rates from 6.5% to 6.25% at the meeting held in February. This deduction was done by the Monetary Policy Committee after about 5 years.
The interest rate was reduced by 0.25% in the meeting held in April for the second time. Now the rates have been cut for the third time. That is, the Monetary Policy Committee has reduced interest rates by 1% at three times.
