Lower EMI in focus: Will your EMI drop as leading banks reduce lending rates post RBI MPC August meeting?

Synopsis

Despite the RBI maintaining the repo rate, several banks, including Bank of Baroda, HDFC Bank, and Punjab National Bank, have reduced their MCLR, potentially lowering EMIs for borrowers. Canara Bank and Indian Bank, however, have kept their lending rates unchanged. These revisions, effective in early August 2025, offer varied impacts on loan interest rates.

Last Updated: Aug 12, 2025, 01:20:00 PM IST

Despite the Reserve Bank of India keeping the repo rate unchanged in its August 6, 2025, monetary policy meeting, several banks have lowered their lending rates, offering relief to borrowers. Bank of Baroda and HDFC Bank have reduced their Marginal Cost of Funds Based Lending Rates (MCLR), which can result in lower EMIs or reduced tenure for home, personal, and auto loans, which are linked to MCLR. Meanwhile, Canara Bank has kept its lending rates unchanged.

What is MCLR?

The marginal cost of funds-based lending rate, or MCLR, is a benchmark rate banks use to determine interest rates of various floating-rate loans, including home, personal, and automobile loans. A decrease in MCLR translates to a potential drop in equated monthly instalments (EMIs) of loans or a shorter loan tenure, benefiting borrowers in the long term. MCLR is not applicable on new loans as new floating rate loans are linked to EBLR. Banks offer the choice of shifting from MCLR to EBLR to their borrowers.

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Bank of Baroda

Bank of Baroda has revised its Marginal Cost of Funds Based Lending Rates (MCLR) effective August 12, 2025. The overnight MCLR has been reduced from 8.10% to 7.95%, while the one-month MCLR has dropped from 8.30% to 7.95%. The three-month MCLR has been cut from 8.50% to 8.35%, the six-month MCLR from 8.75% to 8.65%, and the one-year MCLR from 8.90% to 8.80%.

Sr. No.	MCLR Benchmark	MCLR in (%) w.e.f 12.08.2025
1	Overnight MCLR	7.95
2	1 Month MCLR	7.95
3	3 Month MCLR	8.35
4	6 Month MCLR	8.65
5	1 Year MCLR	8.8

Canara Bank

Public sector lender Canara Bank kept the lending rates unchanged. Its overnight MCLR now stands at 7.95% and its one-month MCLR at 8%. The bank's three-month MCLR is now 8.20%, while the six-month MCLR is 8.55%. The one-year MCLR stands unchanged at 8.75%. Similarly, the two-year and three-year MCLR stands at 8.90% and 8.95%, respectively. The new rates are effective from August 12, 2025.

HDFC Bank

After revision, HDFC Bank’s MCLR now ranges from 8.55% to 8.75%, depending on the loan tenure. The new rates are applicable from August 7, 2025. The bank changed MCLR after the August RBI policy meeting.

HDFC Bank cuts lending rates on these tenures by up to 5 bps: Check latest loan rates

Punjab National Bank (PNB)

Punjab National Bank has reduced MCLR by 5 basis points (bps) on all tenures. The overnight MCLR has been reduced from 8.20% to 8.15%, the one-month MCLR from 8.35% to 8.30%, and the three-month MCLR from 8.55% to 8.50%. The six-month MCLR has come down from 8.75% to 8.70%, the one-year MCLR from 8.90% to 8.85%, and the three-year MCLR from 9.20% to 9.15%. The new rates are effective from August 1, 2025. Note that PNB reduced lending rate before the August RBI policy meeting.

MCLR W.E.F. 01-08-2025
MCLR TENOR	Existing w.e.f. 01.07.2025	Revised w.e.f. 01.08.2025
Overnight	8.20%	8.15%
One month	8.35%	8.30%
Three month	8.55%	8.50%
Six month	8.75%	8.70%
One year	8.90%	8.85%
Three years	9.20%	9.15%

Indian Bank lending rates

Indian Bank has kept its MCLR unchanged. The rates are applicable from August 3, 2025. The overnight MCLR remains at 8.20%, while the one-month MCLR is 8.40%. The three-month MCLR stands at 8.60%, the six-month MCLR at 8.85%, and the one-year MCLR, often used as a benchmark for various retail loans such as home, remains at 9.00%.