Loan Relief Alert: PNB & Bank of India Cut Rates – What It Means for Your EMI
If you’ve been worried about rising EMIs eating into your monthly budget, here’s some much-needed relief! From September 2025, Punjab National bank (PNB) and Bank of india (BOI) have reduced their MCLR (Marginal Cost of Funds Based Lending Rates), offering some cushion to borrowers.Let’s break down what this means for you in simple terms. 👇
1. First, What Exactly Is MCLR?MCLR is the benchmark lending rate at which banks decide the interest rate for floating loans such as:
2. punjab National Bank’s Rate Cut – Up to 15 Basis PointsPNB has revised its MCLR across different tenures. Here’s the updated chart effective 1st september 2025:
Good news for long-term borrowers – the one-year and three-year tenures, often used in home loans, have also seen a reduction.
3. bank of india Joins In – Rates Cut Up to 15 Basis PointsBank of india too has trimmed its rates. Here’s the new structure from 1st september 2025:
✅ BOI has made its longer-term loans slightly cheaper, which will benefit borrowers with housing or business loans.
4. How Much Will You Actually Save?Let’s say you have a home loan of ₹30 lakh with an interest rate of 8.85%.
5. Why Didn’t RBI Cut the Repo Rate?The RBI kept the repo rate unchanged at 5.5% in its August 2025 policy meeting. Why?
6. Should You Switch from MCLR to EBLR?Borrowers on older MCLR-linked loans can consider switching to EBLR, where interest rates adjust faster in line with repo changes.
7. Who Benefits the Most?
8. What’s Next? More Banks May FollowFinancial experts believe this may just be the start. If competition heats up, more banks could reduce lending rates in the coming months, bringing bigger relief to borrowers.
Final TakeawayThe MCLR cuts by PNB and BOI may seem small at first glance, but when it comes to long-term loans, even a 0.05% drop makes a big difference. Borrowers should keep an eye on their bank’s announcements and explore options like loan refinancing or switching to EBLR to maximize savings.👉 For now, loan takers can breathe a little easier this festive season! 🎉Disclaimer:The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
1. First, What Exactly Is MCLR?MCLR is the benchmark lending rate at which banks decide the interest rate for floating loans such as:
- 🏠 home Loans
- 🚗 auto Loans
- 💳 Personal Loans
2. punjab National Bank’s Rate Cut – Up to 15 Basis PointsPNB has revised its MCLR across different tenures. Here’s the updated chart effective 1st september 2025:
| Tenure | Old Rate (Aug 2025) | New Rate (Sep 2025) | Change |
| Overnight | 8.15% | 8.00% | -0.15% |
| 1 Month | 8.30% | 8.25% | -0.05% |
| 3 Months | 8.50% | 8.45% | -0.05% |
| 6 Months | 8.70% | 8.65% | -0.05% |
| 1 Year | 8.85% | 8.80% | -0.05% |
| 3 Years | 9.15% | 9.10% | -0.05% |
3. bank of india Joins In – Rates Cut Up to 15 Basis PointsBank of india too has trimmed its rates. Here’s the new structure from 1st september 2025:
| Tenure | New Rate (Sep 2025) |
| Overnight | 7.95% |
| 1 Month | 8.30% |
| 3 Months | 8.45% |
| 6 Months | 8.70% |
| 1 Year | 8.85% |
| 3 Years | 9.00% |
4. How Much Will You Actually Save?Let’s say you have a home loan of ₹30 lakh with an interest rate of 8.85%.
- Old EMI: Around ₹29,805 (30 years tenure)
- New EMI after cut (8.80%): Around ₹29,605
5. Why Didn’t RBI Cut the Repo Rate?The RBI kept the repo rate unchanged at 5.5% in its August 2025 policy meeting. Why?
- Inflation is under control ✅
- Economic growth is steady ✅
- RBI wanted stability instead of rate cuts
6. Should You Switch from MCLR to EBLR?Borrowers on older MCLR-linked loans can consider switching to EBLR, where interest rates adjust faster in line with repo changes.
- ✅ Advantage: Quicker benefit when RBI cuts repo rate.
- ❌ Disadvantage: Also quicker increase when RBI hikes rates.
7. Who Benefits the Most?
- Home Loan Borrowers – since loans are large and long-term.
- Business Loans – where even a small reduction impacts overall costs.
- Old Borrowers on MCLR – as new loans are already linked to EBLR.
8. What’s Next? More Banks May FollowFinancial experts believe this may just be the start. If competition heats up, more banks could reduce lending rates in the coming months, bringing bigger relief to borrowers.
Final TakeawayThe MCLR cuts by PNB and BOI may seem small at first glance, but when it comes to long-term loans, even a 0.05% drop makes a big difference. Borrowers should keep an eye on their bank’s announcements and explore options like loan refinancing or switching to EBLR to maximize savings.👉 For now, loan takers can breathe a little easier this festive season! 🎉Disclaimer:The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.