Interest Rate Cut: A big news has come for those troubled by loan EMI. Both Punjab National Bank and Bank of India have reduced their MCLR i.e. Marginal Cost of Funds Based Lending Rates from September 2025. Overall, both the banks have reduced their lending rates. This will reduce the EMI of floating rate home loans, personal loans and auto loans.
PNB has reduced its MCLR rates by 15 basis points (bps) from September 2025. Similarly, Bank of India (BOI) has reduced its MCLR rates by 5 to 15 basis points. However, the bank has kept the overnight MCLR unchanged. The new interest rates of both the banks have come into effect from September 1, 2025. This will directly affect the pockets of those customers whose loans are linked to MCLR.
Let us tell you that this reduction has been done when the Reserve Bank of India ( RBI ) kept the repo rate stable at 5.5% in the monetary policy of August 2025. That is, RBI did not change the interest rates, but these two banks have given some relief to their customers on loans.
Punjab National Bank reduced MCLR rates
Overnight MCLR: Earlier it was 8.15%, now reduced to 8.00%.
1 Month MCLR: Decreased from 8.30% to 8.25%.
3 Month MCLR: Reduced from 8.50% to 8.45%.
6 month MCLR: Reduced from 8.70% to 8.65%.
1 Year MCLR: Decreased from 8.85% to 8.80%.
3 year MCLR: Reduced from 9.15% to 9.10%.
This reduction will affect those customers whose home loan or personal loan is linked to these MCLR rates.
Bank of India gave gift to customers
Bank of India has also reduced MCLR across almost all tenures. However, overnight MCLR will remain the same at 7.95%.
1 Month MCLR: Decreased from 8.40% to 8.30%
3-month MCLR: reduced from 8.55% to 8.45%
6-month MCLR: reduced from 8.80% to 8.70%
1 year MCLR: reduced from 8.90% to 8.85%
3-year MCLR: reduced from 9.15% to 9.00%
Know what is MCLR
MCLR is the benchmark rate of banks on the basis of which the interest rate of floating rate loans like home loans, personal loans and auto loans is decided. As soon as the MCLR is reduced, the interest charged on the loan is reduced. This reduces the monthly EMI of the customers. Although now new loans are mainly linked to the External Benchmark Lending Rate (EBLR), but customers with old MCLR-based loans will feel this relief immediately. Customers can shift from MCLR to EBLR if they want.
