Banking: These 6 banks including SBI, HDFC, PNB have reduced interest rates, how much relief will you get on EMI?

Home Loan EMI: If you, too, had taken a home loan a few years ago and were troubled by the rising EMI, then there is great news for you! Almost all the big banks of the country have given a great gift to their millions of old customers. Big banks like SBI, HDFC Bank, Punjab National Bank (PNB), Bank of Baroda (BoB), and Indian Overseas Bank (IOB) have cut their lending rates, which directly means that now your home loan monthly installment (EMI) is going to be reduced.

This news has come at a time when the RBI has kept the repo rate stable, but banks are now passing on the benefits of previous cuts to the customers. So let's understand this whole matter in simple language: what is this cut, who will get the benefit of it, and how much impact it will have on your pocket.

Who will get the benefit?
This is the most important part of this news, about which there is the most confusion. This cut in interest rates is not for everyone. Its benefit will be mainly available to those people whose home loan is linked to 'MCLR' (Marginal Cost of Funds Based Lending Rate). Before 2019, banks used to give loans on the basis of MCLR. You can think of MCLR as the 'house expenses' of the bank. The bank used to decide its interest rate based on how much it costs to raise money. It used to be an internal matter of the bank.

After 2019, the RBI made a rule that all new loans will be linked to EBLR (External Benchmark Lending Rate), which is directly linked to the RBI's repo rate. You can think of it as RBI's 'government rate'. When the RBI reduces the repo rate, loans with EBLR immediately become cheaper.

So, the reduction that banks have made now is in their 'house expenses', i.e., MCLR. That is why its benefit will be directly available only to old customers, whose loan is running on MCLR.

Which bank gave how much relief?

Name of the bank Date of implementation New MCLR range (%)

How much reduction was made?

SBI August 15, 2025 7.90% – 8.85%
Reduction of up to 0.05%

Bank of Baroda August 12, 2025 7.95% – 8.80%
Reduction of up to 0.10% – 0.35%

Canara Bank August 12, 2025 7.95% – 8.95% No change
HDFC Bank August 7, 2025 8.55% – 8.75% Minor reduction
PNB August 1, 2025 8.15% – 9.15%
Reduction of 0.05%

Indian Overseas Bank August 15, 2025 8.05% – 8.90%
Reduction of 0.10%

How much will it affect your EMI?
While this reduction may seem small, like 0.05% or 0.10%, home loans are a long-term deal, so the impact is huge. Suppose you had taken a home loan of ₹30 lakh for 20 years, on which the interest rate was 9.00%. In such a case, your old EMI: ₹26,992. Now, when the bank reduced the MCLR by 0.05%, your new interest rate became 8.95%.

Your new EMI: ₹26,894
How much is the benefit?

Savings per month: ₹98

Savings in one year: ₹1,176

Total savings in 20 years: ₹23,520
If the reduction had been 0.10%, the savings would have been almost double i.e., more than ₹47,000!

What should you do now?

If you also have a home loan, then do not sit quietly and wait for the EMI to be deducted. Take these 3 steps:

1. Check your loan agreement

First of all, take out your home loan papers and check whether your loan is linked to MCLR or EBLR.

2. Find out your 'reset date'

The interest rates of MCLR loans do not change every day. Every loan has a 'reset date', which is usually 6 months or 1 year. The reduction in your EMI will be visible only after that reset date arrives. Contact the bank to know your reset date.

3. Should you switch to EBLR?

If you want, you can switch your MCLR loan to EBLR.

* Advantage: EBLR is directly linked to the repo rate, so as soon as the RBI reduces the rate, your EMI will immediately reduce.

* Disadvantage: The opposite of this is equally true. If RBI increases the repo rate in the future, your EMI will also increase immediately. Changes in MCLR happen gradually.

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