Two major public sector banks have made loans cheaper, reducing home loan EMIs
MCLR: Punjab National Bank (PNB) and Bank of India (BoI) have both lowered the interest rates applicable on loans. Both banks lowered their MCLR on the first days on this month. A healthier growth prospect of the economy along with a sustained moderation in MCLR is expected to positively impact the rates applicable on loans such as housing loans, auto loans, and personal loans. The benefits of this marginal reduction will be available to the borrowers whose loans have been linked to MCLR. Hence, in this case, the loans will be available at a lower interest rate. This will will be applicable from 01st September, 2025.
The Reserve Bank of India (RBI) still has the repo rate on hold at 5.5% in the latest monitory policy update for August 2025, and its banks MCLRs have gone down as their desire to attract additional borrowers and the eagerness to offer competitive prices is intensifying.
Updated PNB Overnight Rate From 8.15% to 8% 1 Month MCLR From 8.30% to 8.25% 3 Month MCLR From 8.50% to 8.45% 6 Month MCLR From 8.70% to 8.65% 1 Year MCLR From 8.85% to 8.80% 3 Year MCLR From 9.15% to 9.10%
Bank of India new rates
Overnight rate 7.95%
1 Month MCLR From 8.40% to 8.30%
3 Month MCLR From 8.55% to 8.45%
6 Month MCLR From 8.80% to 8.70%
1 Year MCLR From 8.90% to 8.85%
3 Year MCLR From 9.15% to 9%
Who is benefitting from this?
Reduction in MCLR rates decreases EMIs on floating rate loans such as home loan, auto loan, and personal loan. Since the rates are now lower, existing borrowers will enjoy lower EMIs. New floating rate loans, however, now EBLR-linked. Also, banks offer the option to shift from MCLR to EBLR. This is a good move and I am sure most customers will benefit, especially those still on the MCLR.
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