Bank of Maharashtra, a major public sector bank with the largest network of branches in Maharashtra, had declared the reduction in its repo linked lending rate (RLLR). It is lowered by 15 basis points to 6.90 percent. The new rates are applicable from November 7 onwards.
Hemant Tamta, Executive Director of the bank said that the decrement in RLLR will make their loan products more attractive, accessible, and reasonable. It includes home loans, car loans, gold loans, education loans, personal loans. Earlier at the time of the festive season, the bank had declared the processing fee repudiation on home loans, car loans, and gold loans. Retail and MSME (Micro Small and Medium Enterprise) loans of lenders will also be linked to the RLLR.
As per the downward revision in RLLR, home loan rates begins at 6.95 percent in which 0.05 percent concession is allowed to woman and defense personals, car loan rates begins at 7.55 percent and gold loan rates at 7.35 percent.
Repo rate is the rate at which the Reserve Bank of India (RBI) lends money to other banks. It is otherwise known as the policy rate or repurchase rate. When the central bank announces a reduction in the repo rate, banks will get money at a cheaper rate, and thus, they will reduce the interest rates for their borrowers.
Changes in repo rates can make a direct impact on big-ticket loans such as home loans. Reduction in repo rates will be declared to bring in growth and to uplift the economic development of India. At this point, consumers will borrow more money from banks and thus actively maintaining inflation.
The RLLR-linked home loan interest rate is depended on multiple factors such as the amount of loan, the loan-to-value of the loan, and also the risk group of the borrower, amongst other things. There will be a margin charged by the bank. The RLLR linked home loans will be gainful to borrowers when the interest rate is moving on a downward trend.
Last year, the Bank of Maharashtra had disclosed that 18 public sector banks had united in Pune as part of their second-round ideation exercise. The intention was to streamline the banking sector as part of the government’s efforts to make India a USD 5-trillion economy within five years.
