RBI Repo Cut Spurs Banks to Lower Lending Rates Across India
- Major banks cut lending rates following RBI’s 25-basis-point repo rate reduction.
- EMI relief for borrowers as RLLR, EBLR, MCLR, and home/auto loan rates are lowered.
- Top banks in focus: Canara Bank, SBI, PNB, IOB, Bank of Maharashtra, Indian Bank, Bank of Baroda, Bank of India.
Borrowers across India have reasons to cheer as several major banks have announced cuts in their lending rates following the Reserve Bank of India’s (RBI) recent reduction of the repo rate. In its Monetary Policy Committee (MPC) meeting earlier this month (December 2025), the RBI trimmed the repo rate by 25 basis points, from 5.50% to 5.25%.
Following this move, leading banks including Canara Bank, State Bank of India (SBI), Punjab National Bank (PNB), Indian Overseas Bank (IOB), Bank of Baroda, Indian Bank, Bank of India, and Bank of Maharashtra have reduced their repo-linked and benchmark lending rates, paving the way for lower EMIs and shorter loan tenures for borrowers.
Canara Bank has cut its Repo Linked Lending Rate (RLLR) by 25 basis points, bringing it down from 8.25% to 8%, effective December 12, 2025. Existing borrowers with loans linked to RLLR can expect immediate relief in their EMIs or loan tenure, depending on their loan agreement. Similarly, Punjab National Bank reduced its RLLR from 8.35% to 8.10%, inclusive of a bank spread of 10 basis points, with the new rates effective from December 6, 2025.
Indian Overseas Bank revised its RLLR to 8.10% from December 15, 2025. The bank’s one-year MCLR now stands at 8.80%, while the three-year MCLR is 8.85%, giving borrowers across different loan tenures a benefit. SBI also announced reductions across both its External Benchmark Lending Rate (EBLR) and RLLR. Its EBLR has been lowered from 8.15% plus Credit Risk Premium (CRP) and Bank Spread (BSP) to 7.90% plus CRP and BSP.
The RLLR, directly linked to the RBI repo rate, has been reduced from 7.75% plus CRP to 7.50% plus CRP, effective December 15, 2025. These changes are expected to translate into significant EMI reductions for eligible borrowers.
Other banks have followed suit. Bank of Baroda cut its effective BRLLR from 8.15% to 7.90%, effective December 6, 2025. Indian Bank reduced its RLLR from 8.20% to 7.95%, while Bank of India trimmed its Repo Based Lending Rate (RBLR) from 8.35% to 8.10%, effective December 5, 2025.
Retail borrowers will also benefit from Bank of Maharashtra’s latest moves. The bank cut its home loan rate from 7.35% to 7.10% and car loan rates from 7.70% to 7.45%, effective immediately. In addition, the bank has waived processing fees on these loans, reducing upfront costs for borrowers.
The coordinated rate cuts across these leading banks are a direct response to the RBI’s repo rate reduction and are aimed at providing relief to borrowers, stimulating credit growth, and supporting household spending. Customers with loans linked to external or repo-based benchmarks can expect lower EMIs in the coming months, making borrowing more affordable across housing, vehicle, and personal loan segments.
