SBI Cuts Loan Rates After RBI Move, EMIs Set to Ease
State Bank of India cuts lending rates by up to 25 bps following RBI’s repo rate reduction, lowering EMIs for home, auto, personal, and business loans.
RBI Rate Cut Flows Through to Borrowers
India’s largest lender, State Bank of India (SBI), has moved swiftly to pass on the Reserve Bank of India’s latest monetary easing to customers. In a clear signal of alignment with the central bank’s growth-supportive stance, SBI has announced reductions across key lending benchmarks, bringing down borrowing costs for millions of retail and corporate customers.
The rate cuts, which take effect from Monday, 15 December 2025, are expected to translate into lower equated monthly instalments (EMIs) for existing borrowers and more attractive loan terms for new applicants, particularly in the housing, automobile, and MSME segments.
RBI’s Fourth Rate Cut of 2025
The move comes days after the RBI delivered its fourth repo rate cut of 2025, trimming the benchmark rate to 5.25% during its December monetary policy review. The decision, taken unanimously by the Monetary Policy Committee (MPC), reflected growing confidence that inflation is under control while economic momentum needs continued policy support.
Despite global headwinds ranging from slowing trade to geopolitical uncertainty, the RBI has maintained that India’s macroeconomic fundamentals remain resilient. With inflation easing and growth risks persisting, the central bank created room for banks to lower lending rates-an opportunity SBI has now seized.
SBI Lowers Key Lending Benchmarks
SBI has announced a broad-based reduction in its lending rates, cutting costs across multiple benchmarks used to price retail and corporate loans.
The most significant change is in the External Benchmark-Linked Lending Rate (EBLR), which has been lowered by 25 basis points, bringing it down from 8.15% to 7.90%. Loans such as home loans, personal loans, and MSME loans that are linked to the EBLR will see immediate benefits.
In addition, the bank has reduced its Marginal Cost of Funds-Based Lending Rate (MCLR) by 5 basis points across tenors, bringing the benchmark to 8.70%. The one-year MCLR, a key reference rate for many corporate and retail loans, now stands at 8.75%, down from 8.80%.
SBI has also lowered its base rate by 10 basis points to 9.90%, offering relief to borrowers with older loans still linked to this benchmark.
Revised SBI Lending Rates at a Glance
-
EBLR: 7.90% (cut by 25 bps)
-
MCLR (overall): 8.70% (cut by 5 bps)
-
One-year MCLR: 8.75% (cut by 5 bps)
-
Base Rate: 9.90% (cut by 10 bps)
For depositors, the bank has announced a modest adjustment as well. The fixed deposit (FD) rate for tenures between two years and less than three years has been reduced by 5 basis points to 6.40%.
RBI Signals Growth-First Approach
Explaining the rationale behind the rate cut, RBI Governor Sanjay Malhotra highlighted the economy’s ability to withstand external pressures while maintaining domestic stability.
Speaking during the televised policy announcement on 5 December 2025, Malhotra noted that although global conditions remain challenging, India has continued to demonstrate resilience. He emphasized that the improved inflation outlook has provided policymakers with sufficient flexibility to focus on supporting growth.
His remarks underscored why banks like SBI are now comfortable passing on rate reductions without risking balance-sheet stress.
Special Schemes and ALCO Decision
Beyond standard benchmarks, SBI has also revised rates under specific deposit and lending schemes. The interest rate on the popular 444-day tenor deposit scheme has been cut from 6.60% to 6.45%, effective the same date as the broader rate changes.
Separately, the bank’s Asset Liability Management Committee (ALCO) approved a 5 basis point reduction in MCLR across tenors ranging from three months to three years. This internal decision ensures that lending rates remain competitive while aligning funding costs with the evolving interest rate environment.
What It Means for Borrowers and Businesses
The immediate and most visible impact of SBI’s rate cuts will be felt by borrowers whose loans are linked to the EBLR or MCLR. For existing customers, EMIs are set to decline, offering relief at a time when household budgets remain under pressure from rising living costs.
Home loan borrowers stand to gain the most, given the long tenure of mortgages and the sensitivity of EMIs to even small rate changes. Auto and personal loan customers will also benefit from lower interest outgo, potentially boosting consumer spending.
For MSMEs and corporate borrowers, the reduced MCLR means cheaper working capital and term loans. This could improve cash flows, support expansion plans, and encourage fresh investment-key objectives of the RBI’s accommodative policy stance.
On the deposits side, the marginal cut in FD rates reflects banks’ efforts to balance lending growth with funding costs. While savers may see slightly lower returns on certain tenures, the broader aim remains to stimulate credit growth and economic activity.
Monetary Easing Begins to Show Real-World Impact
SBI’s decision to lower lending rates marks a crucial step in translating the RBI’s policy intent into tangible relief for consumers and businesses. By passing on the full benefit of the repo rate cut through its EBLR and adjusting other benchmarks, the bank has reinforced its role as a key transmission channel for monetary policy.
As borrowing costs ease and credit demand picks up, the coming months could see renewed momentum in housing, consumption, and business investment. Much will now depend on how other banks respond-and whether further policy easing remains on the table as India navigates an uncertain global economic landscape.
(Disclaimer: This article is intended for informational purposes only. Interest rates and banking policies are subject to change based on regulatory decisions and individual bank terms. Readers should consult official SBI notifications or financial advisors before making borrowing or investment decisions.)
ALSO READ: Why the Most Valuable Firms Are Built on Secrets, Not Products