United Bank of India, Allahabad Bank to offer repo-linked rates; will pass on benefit of RBI's rate cut to customers

Kolkata: Two city-based banks, United Bank of India (UBI) and Allahabad Bank, have decided to offer select loan products linked to repo rates to pass on the benefit of the RBI’s rate cut to their customers, bank officials said on Friday. UBI sources said the bank would offer housing and car loan products with repo linked lending rate (RLLR). For housing loans, the new RLLR will vary from 8.15 percent to 8.30 percent based on loan-to-value (LTV) ratio, and 8.70 percent to 8.85 percent for car loan borrowers. [caption id=“attachment_4469065” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] The bank also said that it will continue to offer home and car loan products linked to the marginal cost of lending rate (MCLR) giving customers the option to choose. This move would lead to lower EMI for the customers, the bank official said. Allahabad Bank would link housing loans up to Rs 75 lakh to RLLR as well as Mudra loans under ‘Sishu’, ‘Kishore’ and ‘Tarun’ categories. Savings bank deposits of Rs 40 lakh and more would also be linked to RLLR, the bank said. However, the lender would also continue to offer loans linked to MCLR. Bankers had been facing flak from the borrowers for not being able to transmit the benefits of repo rate (at which Reserve Bank of India lends to banks) cuts by RBI. Earlier this month, RBI had slashed the repo rate for the fourth time in a row by an unprecedented 35 basis points to cushion the rising headwinds to growth amidst softer inflation.