In September 2025, several major banks in India, including HDFC Bank, Punjab National Bank (PNB), Bank of Baroda (BoB), Bank of India (BOI), and Indian Overseas Bank (IOB), reduced their Marginal Cost of Funds-based Lending Rate (MCLR cut) across select tenures. For borrowers with MCLR‑linked home, auto, or personal loans, this means potential relief in the form of lower EMIs or shortened loan tenures. Banks like SBI and IDBI, however, have kept their rates unchanged, so their customers may not benefit immediately.
Bank‑Wise MCLR Reductions (September 2025)
Below are tables showing recent MCLR cuts by each bank. If your loan is tied to one of these cut tenors, you could see reduced EMIs once your loan rate resets.
HDFC Bank
HDFC Bank applied modest cuts across medium‑term tenors, delivering relief especially for 6‑month, 1‑year, and 2‑year borrowing periods.
| Tenure | Old MCLR | New MCLR | Change (bps) |
| 6‑month | 8.70% | 8.65% | -5 bps |
| 1‑year | 8.70% | 8.65% | -5 bps |
| 2‑year | 8.75% | 8.70% | -5 bps |
| Overnight | 8.55% | Unchanged | — |
| 1 month | 8.55% | Unchanged | — |
| 3 months | 8.60% | Unchanged | — |
| 3 years | 8.75% | Unchanged | — |
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Punjab National Bank (PNB)
PNB implemented broad cuts, effective September 1, 2025, adjusting most tenors, except for those that are very short or very long.
| Tenure | Old MCLR | New MCLR | Change (bps) |
| Overnight | 8.15% | 8.00% | - 15 bps |
| 1 month | 8.30% | 8.25% | -5 bps |
| 3 months | 8.50% | 8.45% | -5 bps |
| 6 months | 8.70% | 8.65% | -5 bps |
| 1 year | 8.85% | 8.80% | - 5 bps |
| 3 years | 9.15% | 9.10% | -5 bps |
Bank of Baroda (BoB)
BoB implemented steeper rate cuts for very short tenors (overnight and 3‑month) from mid‑September, though many longer tenor rates remain unchanged.
| Tenure | Old MCLR | New MCLR | Change (bps) |
| Overnight | 7.95% | 7.85% | -10 bps |
| 3 months | 8.35% | 8.20% | -15 bps |
| 1 month | 7.95% | Unchanged | — |
| 6 months | 8.65% | Unchanged | — |
| 1 year | 8.80% | Unchanged | — |
Bank of India (BOI)
BOI reduced rates across many tenors except overnight, effective September 1, to offer relief to its borrowers.
| Tenure | Old MCLR | New MCLR | Change (bps) |
| Overnight | 7.95% | Unchanged | — |
| 1 month | 8.40% | 8.30% | -10 bps |
| 3 months | 8.55% | 8.45% | -10 bps |
| 6 months | 8.80% | 8.70% | -10 bps |
| 1 year | 8.90% | 8.85% | -5 bps |
| 3 years | 9.15% | 9.00% | -15 bps |
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Indian Overseas Bank (IOB)
IOB’s cuts, effective around mid‑September 2025, target both overnight and longer tenors (1‑year, 2‑year, 3‑year), offering relief to borrowers with multi‑year reset cycles.
| Tenure | Old MCLR | New MCLR | Change (bps) |
| Overnight | 8.05% | 8.00% | -5 bps |
| 1 year | 8.90% | 8.85% | -5 bps |
| 2 years | 8.90% | 8.85% | -5 bps |
| 3 years | 8.95% | 8.90% | -5 bps |
| 1 month | 8.30% | Unchanged | — |
| 3 months | 8.45% | Unchanged | — |
| 6 months | 8.70% | Unchanged | — |
Why These Cuts Matter for You
Understanding how MCLR rate changes impact your loan can help you maximize savings and plan your finances more effectively.
- If your loan is MCLR‑linked, the new lower MCLR will apply at your loan’s next reset date, reducing your future EMIs or enabling a shortened repayment period.
- Many home and personal loans still use MCLR, especially older ones, so these cuts bring relief even without policy changes from the RBI.
- Even small cuts (5‑15 basis points) multiply over large loan amounts and long tenures. Over the years, this can save substantial interest.
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What You Should Do as a Borrower
To make the most of recent MCLR cuts, borrowers should review their loan terms and take timely steps to ensure they benefit from the rate revisions.
- Check your loan’s benchmark: Confirm if your loan is MCLR‑linked.
- Know your reset schedule: Identify when your interest rate resets (e.g., every 3, 6 or 12 months).
- Check if your tenor was cut: Only cuts in the specific MCLR tenor you are tied to will affect you.
- Estimate savings: Use online EMI calculators with new rates vs old rates to see potential monthly savings.
- Explore switching to EBLR (if available): Loans under the External Benchmark Lending Rate usually transmit rate cuts faster.
Banks That Did Not Reduce Rates
While many banks passed on rate cuts, some haven’t made changes in September 2025:
- State Bank of India (SBI) has maintained its lending rates, including MCLR and external benchmark rates, as of September.
- IDBI Bank also did not announce MCLR reductions this month.
Conclusion
The MCLR rate cuts by HDFC, PNB, BoB, BOI, and IOB in September 2025 may bring meaningful relief for borrowers with floating‑rate loans tied to those benchmarks. Even a few basis points reduction can lead to lower EMIs, especially for large loans or longer tenures. If your loan is MCLR‑linked and the relevant tenor was cut, look out for savings when your loan’s rate resets. For borrowers with SBI, IDBI, or tenors that remain unchanged, the relief will be delayed.
Stay proactive: check your loan documents, reset the schedule, and possibly explore switching to an external benchmark rate if that offers better terms.
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