SBI Slashes MCLR: See How Much You Save On ₹1–20 Lakh Loans

In a significant move that could ease the financial burden for many Indian borrowers, the State Bank of India (SBI) has reduced its Marginal Cost of Funds-based Lending Rate (MCLR) by up to 25 basis points across various tenures. Effective from 15 July 2025, this revision is likely to translate into lower Equated Monthly Instalments (EMIs) for home and personal loans, especially those linked to MCLR. According to experts, this rate cut could result in tangible savings for loan holders, depending on their loan amount and repayment term.

SBI Revises MCLR Across Key Tenures

The newly announced MCLR rates indicate a notable reduction across SBI’s overnight to three-year loan offerings. The most substantial change is in the overnight and one-month tenures, which have been slashed by 25 basis points from 8.20% to 7.95%. The three-month rate now stands at 8.35%, down from 8.55%. Six-month loans have seen a 20-bps drop to 8.70%.

The one-year MCLR, widely used as a benchmark for many consumer loans, is reduced from 9.00% to 8.80%, while two-year and three-year tenures now stand at 8.85% and 8.90% respectively, down from 9.05% and 9.10%. These revised rates suggest a clear intent to ease borrowing costs and support consumer sentiment.

Potential Savings Across Loan Amounts

According to expert estimates, borrowers can expect to see modest but meaningful reductions in EMIs across varying loan amounts. For instance, a one-year loan of ₹10 lakh at the new 8.80% rate could save over ₹1,100 in total repayment compared to the previous 9.00% rate. For larger loans, such as ₹20 lakh for a three-year term, the savings increase to more than ₹6,700.

Similarly, on a two-year ₹15 lakh loan, the borrower stands to save approximately ₹3,300. These projections illustrate the cumulative impact of small rate cuts over time, especially on longer-term borrowings.

Impact on Home Loan Borrowers

The rate cut could prove particularly beneficial for new home loan seekers and existing borrowers with loans tied to the MCLR. Home loan EMIs are calculated based on interest rates, and even a 20-25 bps reduction can offer notable financial relief over the course of the loan.

According to banking analysts, this move aligns with efforts to stimulate credit growth and support homebuyers amid fluctuating economic conditions. The lowered MCLR also offers an incentive for refinancing existing loans or shifting from fixed to floating interest rates.

Electric Push for Consumer Sentiment

SBI’s decision comes at a time when the economy is gradually stabilising post-pandemic. Encouraging borrowing by reducing rates is a strategic effort to drive consumer spending, especially in real estate and personal finance. With competitive interest rates, borrowers may find it more attractive to invest in housing or opt for high-value purchases funded by personal loans.

Industry experts suggest this rate adjustment could trigger a ripple effect, prompting other major lenders to follow suit in lowering their own MCLR or lending rates.

Calculating Your EMI Benefit

Borrowers can easily assess their revised EMI obligations using EMI calculators available on most banking websites. For those already servicing loans linked to MCLR, the reduced interest rate will typically reflect in their next reset cycle, depending on the terms of their loan agreement.

It is advisable to consult with your bank or loan officer to understand when the new rates will come into effect for your existing loan. Meanwhile, prospective borrowers are encouraged to take note of this opportunity for lower-cost borrowing.

Disclaimer: This article is for information purposes only. Readers are advised to consult with financial experts or authorised bank representatives before making any decisions. The EMI savings mentioned are based on projections and may vary depending on loan terms and conditions.