The country’s three major government-owned banks have shared good news for their customers. Punjab National Bank (PNB), Indian Bank,
and Bank of India have reduced their MCLR (Marginal Cost of Funds-based Lending Rate) by 5 basis points (bps) at the beginning of July. A reduction of 5 basis points means a cut of 0.05% in interest rates.
This move follows the Reserve Bank of India (RBI) lowering the repo rate by 100 basis points, or 1%, since February 2025.
Because of this, loan interest rates may drop, giving some relief to borrowers through reduced EMIs.
What is MCLR?
MCLR is the minimum interest rate that banks can charge on loans. It acts as the lowest limit, and banks cannot offer loans below this rate unless the RBI allows it.
Now, all three major public sector banks have reduced their MCLR.
PNB Reduces Loan Rates
Punjab National Bank (PNB), the second-biggest public sector bank in India, has lowered its MCLR by 5 bps across all loan periods:
Overnight MCLR: 8.25% to 8.20%
One Month: 8.40% to 8.35%
Three Months: 8.60% to 8.55%
Six Months: 8.80% to 8.75%
One Year (used for home loans): 8.95% to 8.90%
Three Years: 9.25% to 9.20%
Indian Bank’s Updated Rates
Indian Bank has also cut its MCLR by 5 bps for some loan periods, effective from July 3:
Overnight MCLR: No change, stays at 8.20%
One Month: 8.45% to 8.40%
Three Months: 8.65% to 8.60%
Six Months: 8.90% to 8.85%
One Year: 9.05% to 9.00%
Bank of India Lowers Rates
Bank of India has reduced its MCLR by 5 bps for all loan durations starting July 1, 2025:
Overnight: 8.15% to 8.10%
One Month: 8.45% to 8.40%
Three Months: 8.60% to 8.55%
Six Months: 8.85% to 8.80%
One Year: 9.05% to 9.00%
Three Years: 9.20% to 9.15%
EMI Relief for Loan Customers
With these MCLR cuts, borrowers may see a slight reduction in their EMIs. This is especially helpful for those whose loan interest rates are directly tied to MCLR.
After the RBI’s decision to reduce the repo rate, these changes by banks are expected to provide much-needed relief to customers.
