Bank of Baroda , one of India's leading public sector banks, has announced a significant reduction in its Baroda Repo Based Lending Rate (BRLLR). The bank has cut the BRLLR by 25 basis points, bringing it down to 7.90% from the previous 8.15%. This change is set to take effect from December 6, 2025.

Key Points of the Rate Change

• Old BRLLR: 8.15%
• New BRLLR: 7.90%
• Reduction: 25 basis points
• Effective Date: December 6, 2025

This rate cut is expected to have a substantial impact on the bank's lending operations and could potentially lower borrowing costs for customers across various loan categories.

Impact on Borrowers

The reduction in BRLLR may benefit both existing and new borrowers:

1. Existing Borrowers: Those with loans linked to the BRLLR may see a reduction in their interest rates, potentially leading to lower EMIs.
2. New Borrowers: Prospective customers might find Bank of Baroda's loan offerings more attractive due to the reduced lending rate.

Bank's Financial Position

To provide context on Bank of Baroda's financial standing, here's a snapshot of key financial metrics based on the most recent balance sheet data:

The bank has shown significant growth in its total assets and equity over the past year, indicating a strong financial position. This robust financial standing may have provided the bank with the flexibility to reduce its lending rates.

Conclusion

Bank of Baroda's decision to reduce its BRLLR by 25 basis points is a significant move that could enhance its competitiveness in the lending market. As the new rate comes into effect on December 6, 2025, both existing and potential customers should closely monitor how this change may impact their borrowing costs and financial planning.

Moody's Investors Service has affirmed Bank of Baroda 's (BOB) long-term deposit ratings at Baa3 while upgrading its Baseline Credit Assessment (BCA) by one notch to ba1. This rating action comes as part of Moody's broader review of banks in South and Southeast Asia following the update of its Banks methodology.

Key Rating Actions

• Long-term deposit ratings affirmed at Baa3
• Baseline Credit Assessment (BCA) upgraded to ba1 from ba2

Rationale for Rating Actions

The affirmation of Bank of Baroda's Baa3 ratings reflects Moody's expectation of a very high probability of support from the Government of India (rated Baa3 stable) in times of need. This government support results in a one-notch uplift from the bank's standalone credit profile, as represented by its BCA.

The upgrade of BOB's BCA to ba1 is attributed to two main factors:

1. Improved asset quality
2. Strengthened capitalization

These improvements are partly due to the updated ratio definition and scoring calibration for the Capital subfactor in Moody's revised Banks methodology.

Factors That Could Lead to Rating Changes

Potential for Upgrade

Moody's could upgrade Bank of Baroda's BCA if the bank demonstrates:

• Improvement in its Tangible Common Equity (TCE) to Risk-Weighted Assets (RWA) ratio to above 14%
• Increase in its net income to tangible assets ratio to above 1.30% on a sustained basis
• Maintenance of other credit fundamentals

Potential for Downgrade

Conversely, BOB's ratings could face downgrade pressure if:

• India's sovereign rating is downgraded
• There is a multi-notch downgrade of the bank's BCA

The BCA could be downgraded if:

• The bank's loan growth accelerates significantly above system loan growth, posing risks to asset quality
• TCE/RWA ratio declines to below 10.50%
• Net income to tangible assets ratio falls below 0.50% on a sustained basis

Methodology and Regulatory Disclosures

Moody's used its updated Banks methodology as the primary methodology for these ratings. The updated methodology maintains Moody's overall approach but includes changes to the BCA framework, such as updated ratio definitions and scoring calibrations for Capital, Funding Structure, and Liquid Resources subfactors.

Bank of Baroda's "Assigned BCA" of ba1 is set two notches below the "Financial Profile" initial score of baa2. This adjustment reflects the bank's high single-name borrower concentration risk, unseasoned risks due to rapid expansion in retail lending, and modest track record of managing asset quality and profitability across credit cycles.

This rating action is part of a broader review affecting multiple banks in South and Southeast Asia, including DBS Group Holdings Ltd, Oversea-Chinese Banking Corporation Limited, Punjab National Bank, and Canara Bank, among others.

Investors and stakeholders are advised to refer to the full Moody's press release for comprehensive details on the rating actions and methodology.