September 2025 may bring relief for borrowers as several major banks cut MCLR Rates, including HDFC Bank, Punjab National Bank (PNB), Bank of Baroda (BoB), Indian Overseas Bank (IOB), and Bank of India (BOI). The move could slightly ease monthly EMIs or shorten repayment tenures for existing loan customers. However, State Bank of India (SBI) and IDBI Bank have decided to keep their lending rates unchanged, providing no immediate benefit to their borrowers.
What is MCLR?
The Marginal Cost of Funds-based Lending Rate, or MCLR, is the internal benchmark rate that banks use to decide interest rates on floating loans such as home, car, and personal loans. When MCLR rates are cut, it generally lowers the borrowing cost for existing customers, either by reducing EMIs or shortening the loan duration. However, most new floating-rate loans today are linked to the External Benchmark Lending Rate (EBLR), not MCLR. Still, banks allow eligible borrowers to shift from MCLR-linked loans to EBLR if they choose.
HDFC Bank
HDFC Bank has introduced a small reduction in key lending rates effective this month. The six-month and one-year MCLR have been lowered by 5 basis points each, from 8.70% to 8.65%. The two-year rate is also trimmed from 8.75% to 8.70%, while the overnight (8.55%), one-month (8.55%), three-month (8.60%), and three-year (8.75%) tenures remain unchanged.
State Bank of India (SBI)
SBI has opted to keep its rates steady. The bank’s MCLR ranges between 7.90% and 8.85% depending on tenure. The overnight and one-month tenures are fixed at 7.90%, while three-month loans are at 8.30%. The six-month, one-year, two-year, and three-year MCLRs stand at 8.65%, 8.75%, 8.80%, and 8.85%, respectively.
Bank of Baroda (BoB)
Effective September 12, 2025, Bank of Baroda has revised select MCLR tenures. The overnight MCLR has been cut by 10 basis points to 7.85%, while the three-month MCLR has been lowered by 15 basis points to 8.20%. Rates for the one-month (7.95%), six-month (8.65%), and one-year (8.80%) tenures remain unchanged.
Indian Overseas Bank (IOB)
Indian Overseas Bank has reduced its overnight MCLR by 5 basis points to 8.00%. Longer tenures such as the one-year, two-year, and three-year MCLRs have also been lowered by 5 basis points each, now standing at 8.85%, 8.85%, and 8.90%. However, short-term tenures like one-month (8.30%), three-month (8.45%), and six-month (8.70%) remain the same. The new rates are applicable from September 15, 2025.
IDBI Bank
IDBI Bank has decided against a rate cut, keeping its MCLR unchanged across all tenures from September 12, 2025. Current rates stand at 8.05% for overnight, 8.20% for one-month, 8.50% for three-month, and 8.70% for six-month. For longer terms, the bank has maintained 8.75% (one-year), 9.30% (two-year), and 9.70% (three-year).
Punjab National Bank (PNB)
PNB has announced cuts across most tenures with effect from September 1, 2025. The overnight MCLR has dropped from 8.15% to 8.00%, while the one-month rate is now 8.25% (down from 8.30%). The three-month MCLR has been reduced to 8.45%, and the six-month rate now stands at 8.65%. The one-year and three-year MCLRs have also been trimmed to 8.80% and 9.10%, respectively.
Also Read
Bank of India (BOI)
Bank of India has revised rates across the board, except for the overnight tenure, which remains at 7.95%. The bank has slashed its one-month MCLR to 8.30% (from 8.40%), three-month to 8.45% (from 8.55%), and six-month to 8.70% (from 8.80%). The one-year MCLR is down to 8.85% (from 8.90%), while the three-year rate has been reduced to 9.00% (from 9.15%). The revised rates are effective September 1, 2025.
What this means for borrowers
With multiple banks cutting their MCLR, borrowers with loans linked to these benchmarks could see marginal relief in their EMIs or a shorter loan repayment cycle. However, since most new retail loans are now linked to the EBLR, the benefit will primarily reach existing customers whose loan contracts are tied to MCLR. Borrowers may also consider switching to EBLR for better long-term transparency and alignment with policy rate changes.
