The Reserve Bank of India (RBI) recently cut the repo rate by 50 basis points (0.50%), reducing it from 6% to 5.50%. Its effect is now slowly showing on the banks. Following other major banks, Canara Bank has now reduced its Repo Linked Lending Rate (RLLR) from 8.75% to 8.25%.

Canara Bank’s new rates will be applicable from June 12

The bank informed that the new rates will be effective from June 12, 2025. That is, if your loan is based on RLLR from Canara Bank, then either your EMI will decrease or the loan period will be reduced. The bank has taken this step with the aim of providing affordable credit facility to the customers.

Also read: HDFC Bank, ICICI Bank cut FD rates by 25 bps in select tenures

Repo Linked Lending Rate (RLLR) is the interest rate that is directly linked to the repo rate of the Reserve Bank of India (RBI). When RBI decreases or increases the repo rate, the interest rate of loans linked to RLLR also changes accordingly. This brings transparency in interest rates and the benefit of the change reaches the customers immediately. Retail loans like home loans, personal loans and auto loans are usually linked to RLLR.

Repo rate reduced for the third time in a row

This is the third consecutive time in 2025 that the RBI reduced the repo rate. Cumulatively, the repo rate has been cut by 100 basis points since February this year. Its direct benefit is given to the common people in the form of low interest rates on loans. At a time when inflation has softened a bit, this stance of RBI is helping to speed up economic activities.

Other government and private banks are also not far behind

Immediately after the RBI announcement, Punjab National Bank (PNB) and Bank of India (BOI) reduced their RLLR from 8.85% to 8.35%. At the same time, Bank of Baroda reduced its rates from 8.65% to 8.15%.

Indian Bank reduced its RLLR from 8.70% to 8.20% and UCO Bank from 8.80% to 8.30%. UCO Bank has also reduced MCLR by 10 basis points in all tenures.

Also read: Senior citizens can still earn 9% on FDs — Know which banks offer highest interest rates

HDFC Bank is also in the fray

Talking about private banks, HDFC Bank has also reduced its MCLR by 10 basis points. Now HDFC’s one-year MCLR has become 8.90%. This will make home, personal and SME loans cheaper.

These cuts will directly benefit those customers whose loans are linked to RLLR or MCLR. Getting relief in EMI will not only improve the monthly budget, but will also increase the chances of taking a new loan. Government banks have taken the first step and now private banks have also started following the same path.

Summing up…

This reduction in interest rates has come at a time when inflation is under control and the government wants to speed up economic growth. This will benefit everyone including the employed, businessmen and the middle class.