After SBI, BoB links home loan product to RBI’s repo rate

12 Aug 2019

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After SBI, BoB links home loan product to RBI’s repo rate

Bank of Baroda customers opting for the home loan product would have a choice between MCLR-linked rate — indexed to the bank’s cost of funds — or a rate linked to Reserve Bank of India’s repo rate.

As the Bank of Baroda (BoB) on Sunday announced a new home loan product linked to the Reserve Bank of India’s (RBI) repo rate. In doing so, BoB has gone the State Bank of India (SBI) way.

Following the latest Monetary Policy Committee decision to cut rates by 35 basis points (bps), several state-run banks, including Union Bank of India, Allahabad Bank, Bank of India and Syndicate Bank, have expressed their intention to launch loan products linked to an external benchmark, which in most cases so far has been the repo rate. For the time being, the new products are largely restricted to home and auto loans.

BoB customers opting for the home loan product would have a choice between MCLR-linked rate — indexed to the bank’s cost of funds — or a rate linked to RBI’s repo rate.

The marginal cost of funds based lending Rate (MCLR)-linked product starts at 8.45 per cent. Meanwhile, home loans availed at repo rate-linked interest rate start at 8.35 per cent, passing on a further benefit of 10 bps to the current MCLR-rated pricing.

About Bank of Baroda Bank of Baroda

(“The Bank”) established on 20th July 1908 is a State-owned banking and financial services organisation, headquartered in Vadodara (earlier known as Baroda) in Gujarat, India.

Bank of Baroda is India’s leading public sector bank with a strong domestic presence supported by self- service channels. The Bank’s distribution network includes 8,200+ branches, 10,000+ ATMs, 1,200+ self-service e-lobbies and 20,000 Business Correspondents. The Bank has a significant international presence with a network of 100 branches/offices of subsidiaries, spanning 20 countries. The Bank has wholly owned subsidiaries including BOB Financial Solutions Limited (erstwhile BOB Cards Ltd.), BOB Capital Markets and Baroda Asset Management India Ltd. Bank of Baroda also has joint ventures for life insurance viz. IndiaFirst Life Insurance Company Limited and India Infradebt Ltd., engaged in infrastructure financing. The Bank owns 98.57% in The Nainital Bank. The Bank has also sponsored three Regional Rural Banks namely Baroda Uttar Pradesh Gramin Bank, Baroda Rajasthan Gramin Bank and Baroda Gujarat Gramin Bank.

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