Borrowers cheer: SBI revises MCLR to 7.85%, slashes lending rate by 25 bps after RBI rate cut

Following the Reserve Bank of India's (RBI) recent 25 basis point repo rate reduction to 5.25%, major banks have swiftly passed on the benefits to customers. State Bank of India (SBI), the country's largest public sector bank, has now joined the fray by slashing its key lending benchmarks.

This includes cuts to the Marginal Cost of Funds-based Lending Rate (MCLR), External Benchmark Lending Rate (EBLR), Repo Linked Lending Rate (RLLR), Benchmark Prime Lending Rate (BPLR), and Base Rate. Effective December 15, 2025, these changes will lower borrowing costs, reducing equated monthly installments (EMIs) for millions of retail and corporate borrowers.

The cut follows last week’s RBI decision to lower the key interest rate by 25 basis points for the fourth time this year to support growth.

Lending rates represent the interest banks charge on loans, which fluctuate based on loan type—like home loans (now starting around 7.4%) or personal loans (9-10%)—borrower credit profiles, and the lender. RBI's repo rate directly influences these, with India's weighted average bank lending rate hovering at about 9.26%. SBI's adjustments align with this trend, offering tangible relief amid economic pressures.

Revised MCLR rates

SBI's MCLR, a key reference for most retail loans, saw reductions across all tenors. The overnight and one-month rates dropped from 7.90% to 7.85%. Three-month MCLR fell from 8.30% to 8.25%, while six-month eased from 8.65% to 8.60%. The critical one-year tenor—used for many home and auto loans—declined from 8.75% to 8.70%. Longer terms followed suit: two-year from 8.80% to 8.75%, and three-year from 8.85% to 8.80%.

Tenor    Existing MCLR (%)    Revised MCLR (%)
Overnight    7.90    7.85
One Month    7.90    7.85
Three Month    8.30    8.25
Six Month    8.65    8.60
One Year    8.75    8.70
Two Years    8.80    8.75
Three Years    8.85    8.80

EBLR and RLLR cuts for linked loans

SBI also trimmed its EBLR from 8.15% + Credit Risk Premium (CRP) + Bank Spread (BSP) to 7.90% + CRP + BSP—a 25 basis point drop in the benchmark. RLLR, tied directly to RBI's repo rate, fell from 7.75% + CRP to 7.50% + CRP. Borrowers on these external benchmark loans will see EMI reductions based on their risk profile.

Rate    Existing Rate    Revised Rate

EBLR    8.15% + CRP + BSP    7.90% + CRP + BSP
RLLR    7.75% + CRP    7.50% + CRP

BPLR and base rate updates

Finally, SBI lowered its BPLR to 14.65% p.a. and Base Rate to 9.90%, both effective December 15. These moves boost affordability, potentially spurring homebuying and business investments.