SBI New Year Gift for Customers: EMIs to Home Loans Get Cheaper as Interest Rates Cut from This Date

In welcome news for borrowers ahead of the New Year, State Bank of India (SBI) and Indian Overseas Bank (IOB) have announced a reduction in lending rates following the Reserve Bank of India’s (RBI) recent policy move. After the RBI cut the repo rate by 25 basis points, the country’s largest lender SBI decided to pass on the benefit to customers, making loans cheaper and reducing monthly EMIs for millions of borrowers.

These revised rates will come into effect from 15 December 2025, offering relief to both existing customers with floating-rate loans and new borrowers planning to take fresh loans.

RBI’s Rate Cut Brings Relief to Borrowers

The RBI’s decision to reduce the repo rate by 25 basis points was aimed at supporting economic growth and easing the cost of borrowing. Responding swiftly, SBI and IOB announced cuts in their key lending rates, ensuring that customers directly benefit from the central bank’s policy action.

As a result, loans such as home loans, personal loans, vehicle loans, and other retail credit products linked to external benchmarks or MCLR are set to become more affordable.

SBI Cuts EBLR and MCLR Rates

SBI has announced a 25 basis point reduction in its External Benchmark Linked Rate (EBLR), bringing it down to 7.90 percent. This is a significant move, as most new retail loans, including home loans, are linked to the EBLR. With this cut, customers taking fresh loans from SBI will be eligible for lower interest rates.

In addition, SBI has also reduced the Marginal Cost of Funds-based Lending Rate (MCLR) by 5 basis points across all tenures. The one-year MCLR, which is crucial for many loans, has been reduced from 8.75 percent to 8.70 percent. Other tenures have also seen similar reductions, with rates now ranging between 8.75 percent and 8.80 percent.

The bank has also lowered its Base Rate and Benchmark Prime Lending Rate (BPLR) from 10 percent to 9.90 percent, further easing borrowing costs.

Impact on EMIs and New Loans

These reductions mean that borrowers with floating-rate loans linked to EBLR or MCLR will see a decrease in their EMIs from 15 December onwards. Customers taking new loans will also benefit from lower interest rates, making this an ideal time to plan big-ticket purchases such as homes or vehicles.

For home loan borrowers in particular, even a small reduction in interest rates can translate into significant savings over the long term.

Changes in SBI Fixed Deposit Rates

Alongside lending rates, SBI has also revised some of its fixed deposit (FD) rates. For deposits with maturities between two years and less than three years, the FD rate has been reduced by 5 basis points to 6.40 percent. Interest rates for other maturities remain unchanged.

SBI has also announced a reduction in the interest rate of its popular 444-day Amrit Vrishti FD scheme, which will now offer 6.45 percent, down from 6.60 percent. These revised deposit rates will also take effect from 15 December 2025.

Indian Overseas Bank Also Passes on Benefits

Indian Overseas Bank has also joined the rate cut trend. The public sector lender announced a 25 basis point reduction in its External Benchmark Lending Rate (EBLR), also known as the Repo Linked Lending Rate (RLLR). The rate has been cut from 8.35 percent to 8.10 percent, effective 15 December 2025.

Additionally, IOB has reduced its MCLR by 5 basis points for all tenures ranging from three months to three years. This move will directly benefit both existing and new borrowers by lowering EMIs and overall borrowing costs.

What This Means for Customers

The rate cuts announced by SBI and IOB come as a timely New Year gift for customers. Lower interest rates will ease financial pressure on households, encourage new borrowing, and support consumption. Customers with existing floating-rate loans should see automatic reductions in their EMIs, while new borrowers can take advantage of cheaper credit.

As banks continue to align lending rates with RBI’s policy stance, borrowers may find the coming months favourable for refinancing or taking new loans. However, customers are advised to check the exact applicability of rates with their respective banks before making financial decisions.