Lower SBI Loan Rates: State Bank of India and Indian Overseas Bank have lowered their lending rates from December 15, 2025. Both banks fully passed on the Reserve Bank of India’s recent 25-basis-point cut in the policy rate. This move makes loans cheaper for many people. New borrowers will see lower EMIs right away.
From ICICI to SBI, your Home Loan EMIs May Fall as Banks Prepare for New Repo Rate Cuts
What Changed at SBI and IOB?
SBI reduced its External Benchmark Linked Rate by 25 basis points and brought it down to 7.90%. This change directly affects loans linked to the repo rate. SBI also cut its Marginal Cost of Funds-Based Lending Rate across different periods by 5 basis points. The important 1 year MCLR now stands at 8.70% instead of 8.75%. Along with this SBI reduced its Base Rate and BPLR to 9.90%.
These changes help home loan auto loan and personal loan customers. Borrowers whose loans reset quickly will feel the benefit faster. Lower rates mean either smaller EMIs or a shorter loan period if the EMI stays the same.
Indian Overseas Bank also announced relief for borrowers. The bank reduced its Repo Linked Lending Rate by 25 basis points to 8.10%. It also approved a 5-basis-point cut in MCLR for loan periods from three months to three years. This helps both new customers and old customers whose loans follow repo or MCLR rates.
Should Old Borrowers can Switch
People who took loans when rates were higher now have two main options. One option is a loan switch. This means moving the loan to a lower interest rate plan. The second option is a loan top-up. This allows borrowers to take extra money at the new lower rate. A top-up loan often costs less than a personal loan.
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To understand the benefit better let us look at an example:
Imagine a home loan of Rs 50 lakh with 20 years left. At an interest rate of 8.15% the EMI comes to about Rs 42,700.
After the rate drops by 25 basis points to 7.90% the EMI becomes around Rs 41,900. This saves about Rs 800 every month. Over the full remaining loan time the borrower can save nearly Rs 1.9 lakh in interest if rates stay the same.
Before making any decision borrowers should check a few things.
- Reset clause: Repo-linked loans adjust faster than MCLR-linked loans.
- Switching cost: Processing fees and legal charges should not outweigh long-term savings.
- Credit profile: Better credit scores can unlock sharper rates.
