SBI Cuts Home Loan Rates, Trims Interest on Select FDs Too — Middle-Class to Feel Mixed Impact from December 15

India’s largest public sector bank, State Bank of India (SBI), has announced a set of interest rate changes that will bring relief to borrowers but disappoint some investors. Effective December 15, 2025, SBI has reduced interest rates on home loans and other retail loans, while also cutting rates on select fixed deposits (FDs).

What Has Changed?

• MCLR reduced by 5 basis points across all tenures.

• EBLR (External Benchmark Linked Rate) and RLLR (Repo Linked Lending Rate) cut by 25 basis points each.

  • This will directly impact home loans, auto loans and personal loans, making EMIs cheaper.

• FD interest rates cut by 5 basis points on select tenures ranging from 2 years to less than 3 years.

Impact on Customers

Lower Home Loan EMIs
Customers with floating-rate home loans will see a reduction in their monthly EMIs. This comes as a relief for middle-class families already under pressure from high living costs and long-term loan commitments.

Lower Returns for FD Investors
On the flip side, investors—especially senior citizens and conservative savers—will earn slightly lower returns on medium-term fixed deposits. For those relying on FD interest as a steady income source, this cut may pinch.

Why Did SBI Take This Step?

The move follows the Reserve Bank of India’s recent 25 basis points repo rate cut, aimed at supporting economic growth and keeping inflation in check. SBI has passed on the benefit to borrowers by lowering lending rates, while also adjusting deposit rates to manage its overall cost of funds.

The Bigger Picture

SBI’s decision highlights the classic trade-off in banking policy:

• Borrowers benefit through cheaper loans and reduced EMIs.

• Savers lose out due to lower interest income on deposits.

While aspiring homeowners and existing loan customers will welcome the move, FD-dependent investors may need to rethink their savings strategy in a falling interest rate environment.