India’s largest public sector bank, SBI, has announced a decision that will bring relief to customers but cause some concern for investors. The bank has reduced interest rates on several retail loans, including home loans, as well as interest rates on select fixed deposits (FDs). This significant change is effective today, December 15, 2025.
Which rates have changed
Under the MCLR reduction, SBI has reduced its MCLR (Marginal Cost of Funds Based Lending Rate) by 5 basis points across all tenors. This reduction will directly impact floating-rate loans. Additionally, a significant 25 basis point reduction has been made in the EBLR (External Benchmark Linked Rate) and RLLR (Repo Linked Lending Rate), which will directly impact home loan, auto loan, and personal loan EMIs. For FD investors, the bank has reduced interest rates by 5 basis points for tenures ranging from 2 years to less than 3 years.
What will be the direct impact on customers
Customers with floating-rate home loans will see their monthly installments reduced, making their home loan EMIs cheaper. This is a particularly significant relief for middle-class families struggling with the burden of EMIs. This reduction will bring relief to millions of families, especially those dreaming of owning a home. On the other hand, those who have invested in medium-term FDs with SBI will now receive lower interest rates, meaning FD investors’ income will decrease. Senior citizens who depend on interest will also be affected by this reduction.
Why was the decision taken
This move is directly linked to the recent 25-basis-point repo rate cut by the RBI. The RBI took this step to control inflation and boost economic activity, and SBI has passed on the benefits of this move to its customers. While the EMI reduction will provide relief to millions of families, senior citizens, and small investors dependent on fixed deposits will likely be somewhat disappointed. This decision demonstrates that banking policies are always a double-edged sword: relief for borrowers on the one hand, and a reduction in income for savers on the other.