Indian Overseas Bank (IOB) has provided big relief to its customers by reducing loan interest rates. The bank has announced a cut of 50 basis points (0.50%) in its Repo Linked Lending Rate (RLLR).
With this, the RLLR has come down from 8.85% to 8.35%. The decision was taken by the bank’s Asset Liability Management Committee (ALCO) during a meeting on June 11, 2025, and the new rates are effective from June 12, 2025.
This move will benefit customers whose loans are linked to RLLR, as both new loans will become cheaper and EMIs on existing loans will reduce.
Why Did the RLLR Decrease?
IOB’s decision came after the Reserve Bank of India (RBI) recently cut the repo rate by 0.50%.
The rate was reduced from 6% to 5.50% in a meeting chaired by RBI Governor Sanjay Malhotra.
This is the third consecutive repo rate cut by the RBI, made due to inflation being under control.
Other Banks Also Reduced Loan Rates
Following the RBI’s decision, several other banks also reduced their loan interest rates:
Bank of Baroda also cut its RLLR by 0.50%.
HDFC Bank reduced its MCLR by 10 basis points across all loan tenures.
Punjab National Bank, UCO Bank, and Bank of India have also announced relief for their customers by lowering rates.
Impact on Fixed Deposits (FDs)
The cut in the repo rate has also impacted FD interest rates:
ICICI Bank and HDFC Bank reduced FD rates by 25 basis points for deposits below ₹3 crore, effective June 10, 2025.
Kotak Mahindra Bank also revised its FD rates starting June 9, 2025.
What Does This Mean for You?
When the RBI reduces the repo rate, banks can borrow money at lower costs. This allows them to reduce loan interest rates.
As a result, borrowing becomes cheaper, and EMIs on home and other loans come down. However, the flip side is that FD interest rates also fall, since banks need less public money.
With multiple banks, including IOB, cutting loan rates, common customers stand to benefit. But due to falling FD returns, people should plan their investments and loans carefully.
