The BoB thus joins other banks such as Punjab National Bank, Union Bank of India, Allahabad Bank and Kotak Mahindra Bank, who have brought down their marginal cost of funds-based lending rate (MCLR) by 5-10 basis points.

The country’s largest lender — the SBI — had also announced a five-basis-point cut in home loan rates, which will make them cheaper for new borrowers. However, the SBI is yet to announce a reduction in its MCLR.

The cuts by these banks come after the RBI surprised the Street last month by reducing the policy repo rate by 25 basis points to 6.25 per cent because of benign inflation. However, banks have been dragging their feet to pass on this cut to their borrowers and have cited reasons such as high credit costs.

This culminated in RBI governor Shaktikanta Das holding a meeting with various bankers last month where monetary transmission was discussed. At the meeting, the RBI governor reportedly told the lenders that they should bring down their lending rates after the reduction in the policy rate so that consumers benefit.