Good news for borrowers! Punjab National Bank (PNB) and Bank of India (BoI) have reduced their Marginal Cost of Funds-Based Lending Rates (MCLR) effective September 1, 2025. This move means lower EMIs for borrowers with loans linked to MCLR covering home, car, personal, and business loans. While the Reserve Bank of India (RBI) kept its repo rate steady at 5.5% in August, these two banks decided to cut their lending benchmarks to stay competitive and offer relief to customers.
PNB & BoI Reduced MCLR in September 2025
- Competitive Edge: Even without an RBI rate cut, banks can adjust MCLR to attract new borrowers and retain existing ones.
- Borrower Relief: By lowering costs, banks give immediate savings to customers holding loans linked to MCLR.
- Sector Trend: These reductions reflect selective easing in the banking sector, signaling a borrower-friendly environment despite stable repo rates.
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Revised MCLR Rates (Effective September 1, 2025)
Punjab National Bank (PNB) – New MCLR Rates
| Tenor | Previous Rate (%) | Revised Rate (%) |
| Overnight | 8.15 | 8.00 |
| 1 Month | 8.30 | 8.25 |
| 3 Months | 8.50 | 8.45 |
| 6 Months | 8.70 | 8.65 |
| 1 Year | 8.85 | 8.80 |
| 3 Years | 9.15 | 9.10 |
Bank of India (BoI) – New MCLR Rates
| Tenor | Previous Rate (%) | Revised Rate (%) |
| Overnight | 7.95 | 7.95 |
| 1 Month | 8.40 | 8.30 |
| 3 Month | 8.55 | 8.45 |
| 6 Month | 8.80 | 8.70 |
| 1 Year | 8.90 | 8.85 |
| 3 Years | 9.15 | 9.00 |
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Benefits of PNB & BOI Borrowers
- Immediate EMI Relief: If your loan is tied to MCLR, your monthly installment will drop slightly, easing your cash flow.
- Cheaper Loans: Home loans, car loans, and business advances taken before October 2019 (when MCLR was widely used) will see direct benefits.
- Better Bargaining Power: Even for new borrowers (on external benchmark-linked rates), this move keeps competition high and may trigger more banks to revise rates.
- Option to Switch: Existing customers on MCLR can explore shifting to repo-linked loans (EBLR) for better long-term benefits, depending on their profile.
Also Read: PNB personal loan interest rate
Key Takeaways for Borrowers
- The revised rates are effective from September 1, 2025
- Check if your loan is linked to MCLR or EBLR only MCLR-linked loans benefit immediately.
- Keep an eye on upcoming reviews, since banks revise MCLR monthly.
- Borrowers planning fresh loans should compare offers across banks before committing.
Conclusion
The decision by PNB and Bank of India to cut MCLR in September 2025 is welcome news for thousands of borrowers, offering reduced EMIs and lighter repayment burdens. While the RBI has held its repo rate steady, these selective cuts highlight how banks are competing for borrowers in a changing credit environment.
For those with MCLR-linked loans, this is the right time to enjoy lower EMIs. For new borrowers, it’s a reminder to compare banks carefully, as interest rates remain a powerful differentiator in 2025’s lending market.
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