If you’ve been worried about rising EMIs eating into your monthly budget, here’s some much-needed relief! From September 2025, Punjab National bank (PNB) and Bank of india (BOI) have reduced their MCLR (Marginal Cost of Funds Based Lending Rates), offering some cushion to borrowers.

Let’s break down what this means for you in simple terms. 👇

 1. First, What Exactly Is MCLR?

MCLR is the benchmark lending rate at which banks decide the interest rate for floating loans such as:

• 🏠 home Loans
• 🚗 auto Loans
• 💳 Personal Loans

 When MCLR goes down, your loan EMIs get lighter. However, new loans today are mostly linked to EBLR (External Benchmark Lending Rate), but many old borrowers still pay based on MCLR.

 2. punjab National Bank’s Rate Cut – Up to 15 Basis Points

PNB has revised its MCLR across different tenures. Here’s the updated chart effective 1st september 2025:

Good news for long-term borrowers – the one-year and three-year tenures, often used in home loans, have also seen a reduction.

 3. bank of india Joins In – Rates Cut Up to 15 Basis Points

Bank of india too has trimmed its rates. Here’s the new structure from 1st september 2025:

✅ BOI has made its longer-term loans slightly cheaper, which will benefit borrowers with housing or business loans.

 4. How Much Will You Actually Save?

Let’s say you have a home loan of ₹30 lakh with an interest rate of 8.85%.

• Old EMI: Around ₹29,805 (30 years tenure)
• New EMI after cut (8.80%): Around ₹29,605

👉 That’s a saving of ₹200–₹300 per month. Doesn’t sound huge? Over 20 years, it adds up to ₹48,000–₹72,000!

 5. Why Didn’t RBI Cut the Repo Rate?

The RBI kept the repo rate unchanged at 5.5% in its August 2025 policy meeting. Why?

• Inflation is under control ✅
• Economic growth is steady ✅
• RBI wanted stability instead of rate cuts

Even though RBI stayed put, banks have taken the initiative to pass on relief by tweaking their own lending rates.

 6. Should You Switch from MCLR to EBLR?

Borrowers on older MCLR-linked loans can consider switching to EBLR, where interest rates adjust faster in line with repo changes.

• ✅ Advantage: Quicker benefit when RBI cuts repo rate.
• ❌ Disadvantage: Also quicker increase when RBI hikes rates.

Tip: Compare both and decide based on your loan tenure and repayment capacity.

 7. Who Benefits the Most?

• Home Loan Borrowers – since loans are large and long-term.
• Business Loans – where even a small reduction impacts overall costs.
• Old Borrowers on MCLR – as new loans are already linked to EBLR.

 8. What’s Next? More Banks May Follow

Financial experts believe this may just be the start. If competition heats up, more banks could reduce lending rates in the coming months, bringing bigger relief to borrowers.

 Final Takeaway

The MCLR cuts by PNB and BOI may seem small at first glance, but when it comes to long-term loans, even a 0.05% drop makes a big difference. Borrowers should keep an eye on their bank’s announcements and explore options like loan refinancing or switching to EBLR to maximize savings.

👉 For now, loan takers can breathe a little easier this festive season! 🎉

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.