SBI and IOB Slash Lending Rates After RBI Policy Cut

New Delhi: State Bank of India (SBI), the country’s largest public sector lender, has announced a reduction in its lending rates after the Reserve Bank of India’s latest policy rate cut. The move is aimed at making loans more affordable for both existing and new borrowers, providing further momentum to credit growth.

As part of the revision, SBI has lowered its External Benchmark Linked Rate (EBLR) by 25 basis points, bringing it down to 7.90 percent. The revised rates will come into force from December 15, 2025, according to an official statement from the bank.

Impact of RBI’s Fourth Rate Cut This Year

The rate adjustment follows the RBI’s decision last week to reduce the key policy rate by 25 basis points for the fourth time in 2025. The central bank’s action is intended to stimulate economic growth amid evolving market conditions. SBI’s swift response reflects its effort to pass on the benefits of the policy easing to customers.

MCLR Reduced Across All Tenures

In addition to the EBLR cut, SBI has also reduced its Marginal Cost of Funds-Based Lending Rate (MCLR) by 5 basis points across all tenures. With this revision, the one-year MCLR now stands at 8.70 percent, down from 8.75 percent earlier. Other comparable maturity rates have also been adjusted marginally lower, enhancing affordability across various loan products.

Base Rate and Deposit Rate Adjustments

The bank has further reduced its Base Rate and Benchmark Prime Lending Rate (BPLR) to 9.90 percent from the earlier 10 percent, effective December 15. On the deposit side, SBI has lowered the fixed deposit rate by 5 basis points for tenures ranging from two years to less than three years, setting it at 6.40 percent.

However, interest rates for other deposit maturities remain unchanged, indicating continued pressure on deposit mobilisation. The special fixed deposit scheme ‘Amrit Vrishti’ with a tenure of 444 days has also seen its interest rate revised downward from 6.60 percent to 6.45 percent, effective the same date.

Indian Overseas Bank Also Lowers Lending Rates

Another public sector lender, Indian Overseas Bank (IOB), has also announced a reduction in lending rates effective December 15, 2025. The bank has cut its Repo Linked Lending Rate (RLLR), a key component of its External Benchmark Lending Rate, by 25 basis points from 8.35 percent to 8.10 percent, fully passing on the RBI’s policy rate cut to borrowers.

Additionally, IOB’s Asset Liability Management Committee has approved a 5-basis-point reduction in MCLR across tenures ranging from three months to three years.

Relief for Borrowers Across Segments

These rate reductions are expected to lower Equated Monthly Instalments (EMIs) for both existing and new borrowers whose loans are linked to these benchmarks. Retail customers seeking home, vehicle, and personal loans are likely to benefit from improved affordability.

At the same time, MSMEs and corporate borrowers will see a reduction in their overall cost of funds, which can ease working capital pressures and support business expansion during the current economic cycle.

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Sorit Chaudhary

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