SBI Reduces Lending Rate by 25 Basis Points After RBI Rate Cut
SBI has also made minor adjustments to its deposit rates. The interest rates for fixed deposits in the two- to three-year maturity bracket have been reduced by 5 basis points, bringing the rate down to 6.40%.
The State Bank of India (SBI), the country’s largest lender, has announced a 25 basis points reduction in its lending rates, following the Reserve Bank of India’s (RBI) recent monetary policy decision to lower the repo rate. This move is aimed at passing on the benefits of the RBI rate cut directly to borrowers, both retail and corporate, and is expected to boost credit demand across sectors.
According to SBI’s official statement, the External Benchmark Linked Rate (EBLR) will now be 7.90%, down from the previous rate of 8.15%. The bank’s Marginal Cost of Funds-Based Lending Rate (MCLR) has also been revised downward by 5 basis points across tenors, with the one-year MCLR now at 8.70%, compared to 8.75% earlier. Additionally, the bank has adjusted its Base Rate/BPLR to 9.90% from the previous 10%, effective December 15, 2025.
The rate cuts will directly benefit borrowers with home loans, personal loans, vehicle loans, and MSME credit, resulting in lower Equated Monthly Instalments (EMIs). Retail borrowers, in particular, are likely to experience immediate relief in their loan repayments, while corporate clients and small businesses may benefit from a reduction in the cost of funds, helping improve liquidity and investment capacity.
SBI has also made minor adjustments to its deposit rates. The interest rates for fixed deposits in the two- to three-year maturity bracket have been reduced by 5 basis points, bringing the rate down to 6.40%. The bank’s special 444-day scheme, Amrit Vrishti, has been revised from 6.60% to 6.45%. However, interest rates on other deposit maturities remain unchanged, reflecting SBI’s continued focus on maintaining a stable deposit base while balancing the cost of funds.
In a similar move, Indian Overseas Bank (IOB) has passed on the RBI rate cut to its customers. The bank has reduced its Repo-Linked Lending Rate (RLLR) by 25 basis points from 8.35% to 8.10%, and also lowered its MCLR by 5 basis points across tenors ranging from three months to three years.
Analysts suggest that these rate cuts are likely to stimulate borrowing, support credit growth, and provide relief to households amid rising living costs. “With interest rates falling, borrowers will see a direct benefit in their EMIs, which could improve disposable income and overall consumption. It also encourages businesses to borrow at cheaper rates, supporting economic growth,” said a senior banking analyst.
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The RBI’s decision to cut the policy rate was part of its broader effort to maintain monetary easing and ensure sufficient liquidity in the system, especially as the Indian economy seeks stable growth amid global uncertainties. Banks, in turn, have passed the rate cuts to borrowers as part of regulatory expectations and to remain competitive in the lending market.
With SBI taking the lead, it is expected that other major banks will follow suit, ensuring that the benefits of the RBI rate cut are transmitted quickly across the banking sector. Borrowers are advised to check their loan statements and consult with their banks regarding the revised rates to understand the exact impact on their EMIs.
