In a positive move for borrowers, Punjab National Bank (PNB) and Bank of India (BoI) have announced reductions in their Marginal Cost of Funds-Based Lending Rates (MCLR). The new rates came into effect on September 1, 2025, providing relief to individuals and businesses with loans linked to MCLR.
Key Highlights of the MCLR Reduction
Punjab National Bank (PNB)
Reduced MCLR by up to 15 basis points across various tenures.
Offers lower interest costs for borrowers with home loans, personal loans, and business loans linked to MCLR.
Bank of India (BoI)
MCLR reduced by 5 to 15 basis points across all tenures, except the overnight tenure.
Provides immediate financial relief to borrowers by lowering EMI obligations.
Effective Date: September 1, 2025
Applicable to new loans and existing loans linked to MCLR for interest reset.
Impact on Borrowers
Lower EMIs: Borrowers with floating-rate loans linked to MCLR benefit from reduced monthly installments.
Business Loans: Companies with working capital or term loans linked to MCLR can enjoy cost savings.
Home Loans: Homeowners see a modest reduction in interest, improving affordability.
Encouragement for Borrowing: Lower rates may incentivize new borrowers to consider loans for housing, education, or business expansion.
FAQs
Q1: What is MCLR?
A1: Marginal Cost of Funds-Based Lending Rate (MCLR) is the minimum interest rate a bank can offer on loans. It’s linked to the bank’s cost of funds and ensures transparent pricing.
Q2: How does the reduction affect existing borrowers?
A2: Borrowers with loans linked to MCLR will see a reduction in interest at the time of their next rate reset, lowering EMIs.
Q3: Does this reduction apply to all loan types?
A3: Yes, it applies to home loans, personal loans, and business loans linked to MCLR, except for overnight tenure loans in BoI.
Q4: When did the new MCLR rates take effect?
A4: The revised MCLR rates came into effect on September 1, 2025.
Q5: Why did banks reduce MCLR?
A5: Banks adjust MCLR in response to changes in funding costs, RBI policies, and market conditions, providing relief to borrowers and maintaining competitiveness.
Conclusion
The MCLR reduction by PNB and BoI is a welcome relief for borrowers, lowering loan costs and improving affordability. Individuals and businesses should review their loans to understand the impact of the new rates and plan their finances accordingly. This adjustment reflects the banks’ proactive approach to supporting borrowers in a dynamic interest rate environment.
Published on : 4th September
Published by : SMITA
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