(Image source from: Outlookbusiness.com)
The biggest bank in the country, State Bank of India (SBI), has cut its lending rate by 25 basis points. This change follows a decrease in the Reserve Bank's policy rate, leading to cheaper loans for both new and existing customers. With this recent drop, SBI's External Benchmark Linked Rate (EBLR) will lower by 25 basis points to 7.90 percent. According to a statement from SBI, these new rates will take effect on December 15, 2025. This rate cut is in reaction to the Reserve Bank’s decision last week to reduce the key interest rate by 25 basis points for the fourth time this year to encourage economic growth. Additionally, the bank has lowered the Marginal Cost of Funds-Based Lending Rate (MCLR) by 5 basis points for all terms. As a result, the one-year MCLR will decrease from the current rate of 8.75 percent to 8.70 percent. Likewise, the one-year maturity rate will be lowered by 5 percent to 8.75 percent and 8.80 percent, respectively, as per the bank's statement.
The bank has also reduced the Base Rate/BPLR to 9.90 percent from the previous 10 percent, starting from December 15.
Furthermore, the bank has chosen to decrease the fixed deposit rate by 5 basis points for deposits maturing in 2 to less than 3 years to 6.40 percent, effective from December 15. Nevertheless, the bank has kept the interest rates on other maturity periods unchanged, showing a need for better deposit collection. The interest rate for the specific term scheme of '444 days', called Amrit Vrishti, has been adjusted from 6.60 percent to 6.45 percent effective from December 15. Another government-owned bank, Indian Overseas Bank (IOB), also revealed that it is lowering its lending rates, taking effect on December 15, 2025. IOB has cut its External Benchmark Lending Rate (EBLR) or Repo Linked Lending Rate (RLLR) by 25 basis points from 8.35 percent to 8.10 percent, completely passing on the policy rate cut to its clients, according to a statement from IOB.
In addition, the bank's Asset Liability Management Committee (ALCO) has approved a 5-basis-point decrease in the Marginal Cost of Funds-Based Lending Rate (MCLR) for terms ranging from three months to three years. These updates will reduce the monthly payments (EMIs) for both current and new borrowers whose loans are based on these benchmarks, the bank indicated. Retail clients looking for home, auto, and personal loans will find them more affordable. Small and medium enterprises (MSMEs) and corporate borrowers will also see a decrease in their funding costs, which will help meet working capital needs and bolster business growth, it noted.
