SBI passes RBI rate cut benefit to borrowers, reduces lending rate by 25 bps

The country’s largest lender State Bank of India (SBI) has reduced its lending rate by 25 basis points, following the Reserve Bank’s policy rate cut, making loans cheaper for existing and new borrowers.

With the latest round of reduction, the External Benchmark Linked Rate (EBLR) of SBI will come down by 25 basis points to 7.90%.

The revised rates come into effect from December 15, 2025, SBI said in a statement.

The rate reduction is in response to last week’s RBI’s decision to slash the key interest rate by 25 basis points for the fourth time this year to support growth.

The bank has also slashed the Marginal Cost of Funds-Based Lending Rate (MCLR ) across all tenures by 5 basis points. With the revision, the one-year maturity MCLR will fall to 8.70% from the existing 8.75%.

Similarly, a one-year maturity rate will be cheaper by 5 per cent to 8.75% and 8.80%, respectively, it said.

The bank has lowered the Base Rate/BPLR to 9.90% from the existing 10%, effective from December 15, it said.

Besides, the bank also decided to cut the fixed deposit rate by 5 basis points for maturity two years to less than three years to 6.40% effective December 15.

However, the bank has retained interest rates on other maturity buckets, indicating pressure on deposit mobilisation.

The interest rate of the specific tenor scheme of ‘444 days’ that is Amrit Vrishti has been revised from 6.60 per cent to 6.45 per cent with effect from December 15.

Another state-owned lender Indian Overseas Bank (IOB) also announced a reduction in its lending rates, effective December 15, 2025.

The Bank has reduced its External Benchmark Lending Rate (EBLR) – specifically the Repo Linked Lending Rate (RLLR) by 25 basis points from 8.35% to 8.10%, thereby fully passing the policy rate cut to its customers, IOB said in a statement.

Additionally, the Bank’s Asset Liability Management Committee (ALCO) has approved a 5-basis-point reduction in the Marginal Cost of Funds-Based Lending Rate (MCLR) across tenors from three months to three years.

These revisions will lower Equated Monthly Instalments (EMIs) for both existing and new borrowers whose loans are linked to these benchmarks, it said.

Retail customers seeking home, vehicle, and personal loans will benefit from enhanced affordability. MSMEs and corporate borrowers will also experience a reduction in their cost of funds, aiding working capital requirements and supporting business growth, it added.