Mumbai, June 6 (IANS) The Bank of India (BOI) on Friday reduced its repo-based lending rate (RBLR) by 50 basis points, bringing it down from 8.85 per cent to 8.35 per cent.

This move follows the Reserve Bank of India's (RBI) decision to cut the repo rate by 50 basis points, lowering it from 6 per cent to 5.5 per cent.

The central bank’s decision is aimed at boosting economic activity by making loans cheaper for businesses and individuals.

The RBI's Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, announced this rate cut during its latest policy meeting.

Governor Malhotra noted that with this quick series of cuts, the MPC believes there is now limited room left for more rate cuts to support growth.

Along with the repo rate cut, the RBI also reduced the Cash Reserve Ratio (CRR) by 100 basis points.

The CRR, which is the minimum amount banks must hold with the RBI, will now be reduced from 4 per cent to 3 per cent.

This reduction will happen in four stages and is expected to inject around Rs 2.5 lakh crore of liquidity into the banking system.

In another significant shift, the RBI changed its policy stance from ‘accommodative’ to ‘neutral’. This means that future interest rate decisions will depend on how the economy performs, rather than aiming solely to support growth or control inflation.

Despite the rate cuts, the RBI has kept its GDP growth forecast for the current financial year unchanged at 6.5 per cent.

The quarterly growth estimates have also remained steady at 6.5 per cent for the first two quarters, 6.7 per cent for the third, and 6.6 per cent for the fourth.

On the inflation front, the RBI has lowered its full-year forecast from 4 per cent to 3.7 per cent.

The inflation forecast for the first two quarters of the year has also been revised downward to 2.9 per cent and 3.4 per cent, from 3.6 per cent and 3.9 per cent previously.

Meanwhile, Bank of India’s stock reacted mildly to the announcement, closing 0.1 per cent higher at Rs 124.3 on the National Stock Exchange (NSE) on Friday.

In comparison, the benchmark Nifty rose 1.02 per cent. So far this year, Bank of India shares have gained 22.06 per cent, and have gone up 5.54 per cent in the last 12 months.

--IANS

pk/vd