SBI has announced to its existing and prospective customers good news following a decrease in repo rates set forth by RBI with the announcement of a decrease in interest rates for multiple loan types provided by SBI including but not limited to Home Loans. The decrease will directly impact monthly repayments (or EMIs) of millions of borrowers.
The marginal cost of funding based lending rate (or MCLR), external benchmark lending rate (or EBLR), Repo Linked Lending Rate (or RLLR), Benchmark Prime Lending Rate (BPLR) and Base Rate will decrease by a maximum of 25 basis points on all existing loan products as well as new loan products, effective December 25, 2025.
Behind this decision is the RBI’s fourth consecutive repo rate cut. After a 25 basis point reduction, the repo rate has come down to 5.25 percent. The direct benefit of this policy decision of the central bank to boost growth is now going to reach the homes of the common customer.
Currently, SBI charges a minimum interest rate of around 7.4 percent on home loans. In the case of personal loans, this rate is around 9 to 10 percent. As a result of the new decision, the interest rates on both home loans and personal loans will come down a little more, which will bring big savings to the customers in the long run.
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What has changed in MCLR?
Overnight and one-month MCLR have been reduced to 7.85%, three-month to 8.25%, six-month to 8.60%, one-year to 8.70%, two-year to 8.75% and three-year to 8.80%. As a result, the interest rates on MCLR-linked loans will also come down.
EBLR and RLLR also eased
SBI has reduced its EBLR to 7.90% + CRP + BSP, which was earlier 8.15% + CRP + BSP. At the same time, RLLR has been reduced to 7.50% + CRP, which was earlier 7.75% + CRP. Borrowers linked to external benchmarks will get the benefit of reduced EMIs as per their risk profile.
In addition, the Benchmark Prime Lending Rate (BPLR) has been reduced to 14.65 percent and the base rate has been reduced to 9.90 percent, which will be effective from December 15.
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How much will the EMI be reduced?
Let’s say, if someone takes a home loan of Rs 30 lakh for 20 years and the interest rate is 8 percent, then his EMI is currently around Rs 25,093. After the interest rate is reduced by 25 basis points, that EMI will come down to around Rs 24,628. That is, a few hundred rupees can be saved every month and lakhs of rupees in the long run.
Overall, this decision of SBI is a big relief for home borrowers and businessmen. Economic experts believe that reducing interest rates will increase purchasing power, encourage home buying and investment.