Great news for loan takers: These two banks have reduced interest rates, know what are the new interest rates now..
There is some relief news for those troubled by the EMI of the loan. Both Punjab National Bank and Bank of India have reduced their MCLR, i.e., Marginal Cost of Funds Based Lending Rates, from September 2025.
This reduction was achieved when the Reserve Bank of India kept the repo rate stable at 5.5% in the monetary policy of August 2025. That is, RBI did not change the interest rates, but these two banks have given some relief to their customers on the loan.
What is MCLR?
Marginal Cost of Funds Based Lending Rate (MCLR) is the rate at which banks fix the interest rate of their floating rate loans, like home loans, auto loans, and personal loans. If MCLR decreases, it has a direct impact on the EMI of the loan. That is, customers may see a slight reduction in their loan installment. However, now new loans are linked to EBLR (External Benchmark Lending Rate). Old customers can shift from MCLR to EBLR if they wish.
PNB reduces MCLR rates
Punjab National Bank has reduced the rate by up to 15 basis points on different tenures from September 2025. This reduction will benefit those customers whose loans are linked to MCLR.
Tenure Old Rate (01.08.2025) New Rate (01.09.2025)
Overnight 8.15% 8.00%
1 Month 8.30% 8.25%
3 Months 8.50% 8.45%
6 Months 8.70% 8.65%
1 Year 8.85% 8.80%
3 Years 9.15% 9.10%
The Bank of India also reduced rates.
Bank of India has also reduced interest rates by 5 to 15 basis points. However, it has kept the overnight tenure rate unchanged. This decision will provide some relief in EMI to millions of BOI customers.
Tenure New Rate (from 01.09.2025)
Overnight 7.95%
1 month 8.30%
3 months 8.45%
6 months 8.70%
1 year 8.85%
3 years 9.00%
How will it affect EMI?
Suppose you have a home loan of ₹30 lakh, whose interest rate is 8.85%. Now, if it comes down to 8.80%, then you can save about ₹200-300 every month in your EMI. This saving will be more visible on long-term loans. There will be less relief in short-term loans. Customers whose loan is linked to EBLR will not get the direct benefit of this reduction.
Why did the RBI not change the repo rate?
In the meeting of the Monetary Policy Committee (MPC) held on 6 August 2025, the RBI had decided to keep the repo rate stable at 5.5%. RBI believes that inflation is currently under control. This is why RBI did not make any change in the repo rate, but banks have given direct relief to customers by reducing their lending rates.
The MCLR reduction made by PNB and Bank of India may seem small, but this relief matters for millions of customers. Even though RBI keeps the repo rate stable, banks are adjusting the rates according to their own. In the coming days, more banks can also give such relief.
Disclaimer: This content has been sourced and edited from Navbharat Times. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
