Both Bank of Baroda (BoB) and Indian Overseas Bank (IOB) have reduced their MCLR (Marginal Cost of Funds-based Lending Rate) this September 2025.
For anyone looking for a loan option during this time, this is a potential savings moment.
These cuts directly affect your personal loan interest rate and home loan EMIs, offering potential savings.
But what exactly changes, and how can you benefit? Read more to find out what’s best for you.
Comparison of BOB & IOB Banks Cutting MCLR
Here is a snapshot of the comparison of various banks and their MCLR cuts.
| Bank | Key Change | Impact on Borrowers |
|---|---|---|
| IOB | -5 bps cut across overnight to 3-year MCLR | Relief for long-reset borrowers on personal and home loans |
| BoB | -10 bps overnight, -15 bps 3-month MCLR | Immediate benefit for short-term personal loans |
| IDBI | 1-year MCLR fixed at 8.75% | Provides stability in rate-sensitive lending |
Also read: PNB & BOI Cut Lending Rates in September 2025
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The MCLR Backstory and its Effect on your EMIs
MCLR (Marginal Cost of Funds-based Lending Rate) is a benchmark rate banks use to calculate interest on floating-rate loans like personal loans, home loans, and auto loans.
Simply put, MCLR is the minimum interest rate a bank can charge for a specific loan, set by the RBI.
When MCLR drops, your monthly EMIs may reduce, or your loan term may get shorter. Both mean extra savings
| MCLR applies only to floating-rate loans taken before October 2019. Loans after that are linked to EBLR.
If you are still on MCLR, consider switching to EBLR for quicker rate benefits. |
Timing Matters, as the benefit shows up at your reset period, which is typically every 3 or 6 months.
Indian Overseas Bank (IOB) Cuts Rates
Effective September 15, 2025, IOB will reduce its overnight, one-year, two-year, and three-year MCLR by 5 basis points each.
- Unchanged: One-month, three-month, and six-month rates stay the same.
- Impact: Retail borrowers with long reset cycles, like IOB personal loan or education loan customers, stand to gain.
Here is an overview of IOB Personal Loan Rates for September 2025:
| Tenure | Old MCLR (%) | New MCLR (%) | Change (bps) |
|---|---|---|---|
| Overnight | 8.05 | 8.00 | -5 |
| 1 Month | 8.15 | 8.15 | 0 |
| 3 Months | 8.40 | 8.40 | 0 |
| 6 Months | 8.60 | 8.60 | 0 |
| 1 Year | 8.90 | 8.85 | -5 |
| 2 Years | 8.95 | 8.90 | -5 |
| 3 Years | 8.95 | 8.90 | -5 |
Suggested read: Can You Really Switch Your Personal Loan
Bank of Baroda (BoB) Rate Cut
Starting September 12, 2025, BoB will lower its overnight MCLR by 10 bps and three-month MCLR by 15 bps.
- Unchanged: One-month, six-month, and one-year rates remain steady.
- Impact: Quick relief for short-reset borrowers, especially BoB personal loan and working capital loan customers.
Here is an overview of BoB Personal Loan Rates for September 2025:
| Tenor | Old MCLR (%) | New MCLR (%) | Change (bps) |
|---|---|---|---|
| Overnight | 7.95 | 7.85 | -10 |
| 1 Month | 8.15 | 8.15 | 0 |
| 3 Months | 8.35 | 8.20 | -15 |
| 6 Months | 8.55 | 8.55 | 0 |
| 1 Year | 8.85 | 8.85 | 0 |
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IDBI Personal Loan Rates
Though not slashing as widely as BoB or IOB, IDBI Bank also tweaked its rates recently. Its one-year MCLR now stands at 8.75%.
| Tenor | New MCLR (%) |
|---|---|
| 1 Year | 8.75 |
What Borrowers Should Do Now
If you have a personal loan or home loan with BoB, IOB, or IDBI, here’s how you can benefit:
- Check Your Reset Date: If your reset cycle is due soon, you can expect an EMI relief.
- Switch to EBLR: Consider moving from MCLR to External Benchmark Linked Rate (EBLR) loans for faster rate adjustments.
- Track EMI Savings: Use an EMI calculator to see how much you could save.
- Review Finances: A quick credit score check ensures you’re ready for refinancing or restructuring.
- Explore Loan Options: If planning a big purchase, consider applying for a loan now while rates are lower.
For households, a reduced MCLR means lower EMIs on personal loans and home loans, resulting in more disposable income. In India as a whole, this could boost spending power, support consumption, and stimulate sectors like housing, education, and retail. It’s a small but meaningful nudge to the broader economy.
If you want to apply for a personal loan, it is wise to do it the smart way. Use a digital lending platform like BuddyLoan and compare the banks and NBFCs
Conclusion
With BoB and IOB slashing MCLR and IDBI holding steady, borrowers get a clearer picture of where personal loan interest rates are headed. Whether it’s your BoB personal loan, IOB personal loan, or planning ahead with IDBI, staying on top of these rate cuts helps you make smarter financial decisions. The key is to track reset dates, use tools wisely, and prepare for the next cycle of changes.
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