A Big Gift for Customers - Bank Reduces MCLR, EMIs Will Be Lower

Bank Loans: South Indian Bank has decided to reduce its Marginal Cost of Funds-Based Lending Rate (MCLR) by 0.10 percent. This reduction could make various types of loans linked to the bank cheaper. This news is especially comforting for customers who have taken out or are planning to take out a home loan, car loan, personal loan, or business loan.

According to information provided by the bank, customers whose loans are linked to MCLR may experience a slight reduction in their EMIs. Floating rate loans are directly affected by MCLR, so customers will benefit from the rate reduction.

What is MCLR?

MCLR stands for Marginal Cost of Funds-Based Lending Rate. It is the minimum interest rate at which banks lend to their customers. When a bank reduces this rate, the interest rate charged on the loan also decreases. This reduces the cost of borrowing.

How will customers benefit?

Existing customers’ EMIs may be reduced somewhat after the rate reduction, although this will depend on the reset period of their loan. New borrowers will directly benefit from the lower interest rates. Furthermore, demand in the real estate and automobile sectors is also expected to increase, as cheaper loans encourage people to purchase.

According to banking experts, this reduction in interest rates could boost loan demand in the market. If other banks also make similar reductions, obtaining loans may become easier in the future.

South Indian Bank’s latest MCLR rates, revised after January 2026 and effective from February 2026, are as follows: Overnight MCLR 8.05 percent, One-month 8.50 percent, Three-month 9.45 percent, Six-month 9.50 percent, and One-year 9.55 percent. These rates have been reduced by up to 0.10 percent since the recent review.

Customers with loans linked to the MCLR should contact their bank to confirm when the new rate will be applied to their loan. Customers considering a new loan can take advantage of the current lower rates. This move by the bank is also being seen as a sign of further softening of interest rates in the future.