Repo-linked lending rates: PSU banks raise rates by 25 bps after RBI hike
Why in the news
Public sector banks raised their repo-linked lending rates (RLLR) by 25 basis points after the RBI increased the repo rate to 5.50% on 7 October 2026. New loans linked to the external benchmark have become costlier.
Key facts
- The RBI’s 25 bps hike was unanimous, and the policy stance changed from neutral to calibrated tightening.
- Transmission to lending rates is immediate. Existing external-benchmark loans will usually be repriced upward within 90 days.
- Deposit rates may adjust slowly because banks have ample liquidity, partly from FCNR(B) deposits.
| Bank | Benchmark | Old | New |
|---|---|---|---|
| Punjab National Bank | RLLR | 8.10% | 8.35% |
| Indian Overseas Bank | RLLR | 8.10% | 8.35% |
| Bank of India | Repo-Based Lending Rate | 8.10% | 8.35% |
| Indian Bank | Repo-Linked Benchmark Lending Rate | 7.95% | 8.20% |
| Bank of Baroda | Baroda Repo Based Lending Rate | – | 8.15% |
| UCO Bank | UCO Float | 8.05% | 8.30% |
| UCO Bank | UCO Prime | 5.25% | 5.50% |
Indian Bank and UCO Bank changes took effect from 8 October 2026. Bank of Baroda’s new rate implies a spread of 2.65 percentage points over the repo rate.
About repo-linked lending rate
An RLLR is an external benchmark lending rate (EBLR): the bank adds a spread to the RBI’s policy repo rate. So a repo change passes straight to floating-rate loans linked to it, which is why transmission to lending rates is immediate.
Exam angle
- Repo rate after the October 2026 policy: 5.50%.
- RLLR = repo rate + spread; a 25 bps repo hike lifts RLLR by 25 bps.
- RBI stance: calibrated tightening.