SBI loans to get cheaper as bank passes on RBI rate cut to borrowers

SBI and IOB have cut lending rates after the RBI’s repo rate reduction, offering relief to retail, MSME and corporate borrowers

PGurus Newsdesk

December 13, 2025

Rate relief for borrowers as SBI passes on RBI rate cut

Fixed deposit rates trimmed marginally; other tenors unchanged

State Bank of India (SBI), the country’s largest lender, on Monday announced a reduction in its lending rates following the Reserve Bank of India’s latest policy rate cut, offering relief to both existing and new borrowers.

SBI said it has reduced its External Benchmark Linked Rate (EBLR) by 25 basis points, bringing it down to 7.90 percent, effective December 15, 2025. The move comes after the RBI last week cut the repo rate by 25 basis points for the fourth time this year to support economic growth.

The public sector bank has also trimmed its Marginal Cost of Funds-Based Lending Rate (MCLR) by 5 basis points across all tenures. Following the revision, the one-year MCLR will decline from 8.75 percent to 8.70 percent.

Additionally, SBI has lowered its Base Rate/BPLR by 10 basis points, from 10 percent to 9.90 percent, with effect from December 15.

Fixed deposit rates see marginal cut

On the deposit side, SBI announced a 5-basis-point reduction in fixed deposit rates for the two-year to less-than-three-year maturity bucket, bringing it down to 6.40 percent. Rates on other maturities have been retained, indicating continued pressure on deposit mobilisation.

The interest rate for the ‘Amrit Vrishti’ 444-day special deposit scheme has also been revised downward from 6.60 percent to 6.45 percent, effective December 15.

Indian Overseas Bank follows suit

Another state-owned lender, Indian Overseas Bank (IOB), also announced a rate cut aligned with the RBI’s policy decision. IOB said it has reduced its Repo Linked Lending Rate (RLLR)—a form of EBLR—by 25 basis points, from 8.35 percent to 8.10 percent, effective December 15, 2025.

The bank’s Asset Liability Management Committee (ALCO) has also approved a 5-basis-point reduction in MCLR across tenors ranging from three months to three years.

Borrowers to benefit from lower EMIs

Both banks said the rate reductions will lead to lower EMIs for loans linked to external benchmarks and MCLR. Retail borrowers seeking home, vehicle, and personal loans are expected to benefit from improved affordability, while MSMEs and corporate borrowers will see a reduced cost of funds, easing working capital pressures and supporting business expansion.

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