The beginning of September 2025 has brought great news for millions of customers of Punjab National Bank (PNB) and Bank of India (BoI). Both banks have cut the interest rates on their loans. This cut has been made in MCLR, i.e., Marginal Cost Based Lending Rate. This decision will greatly benefit the customers borrowing home loans, auto loans, and personal loans. The revised rates have come into effect from 1 September 2025.
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How much has changed
PNB has reduced its MCLR rates by up to 15 basis points. At the same time, Bank of India has reduced the rates by 5 to 15 basis points in all periods except the overnight period. Although the Reserve Bank of India (RBI) retained the repo rate at 5.5 percent in the Monetary Policy Committee (MPC) meeting on August 6, 2025, both these banks independently decided to give relief to the customers.
What is MCLR
MCLR is a benchmark interest rate, which banks use to decide how much interest will be charged to customers on their floating rate loans, such as home loans, personal loans, or car loans. When banks reduce MCLR, it has a direct impact on EMI. This reduces the installment and lightens the burden of repaying the loan for the customers.
EBLR is now applicable to new loans
However, now banks have linked the new floating rate loan to EBLR, i.e., External Benchmark Lending Rate, instead of MCLR. This means that new customers will be able to take advantage of the interest rates linked to EBLR instead of MCLR. Old customers can shift from MCLR to EBLR if they want.
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Impact on customers
This move of PNB and Bank of India is going to give relief to the customers before the festivals. The EMI of existing customers linked to MCLR will be reduced and their monthly budget will be lightened. Also, new customers will have an increased chance of getting loans at competitive rates through EBLR.