SBI MCLR Cut Rates August 2025: What It Means for Your EMIs Plus All Banks That Reduced Rates This Month

TL;DR

• SBI trimmed its Marginal Cost of Funds-based Lending Rate (MCLR) by up to 5 bps on select tenors, effective August 15, 2025, taking the MCLR range to 7.90%–8.85%. This can reduce EMIs for loans linked to MCLR on the next reset date.
• HDFC Bank revised its MCLR effective August 7, 2025, cutting select tenors by up to 5 bps (indicative one-year MCLR now in the 8.55%–8.75% zone).
• Bank of Baroda (BoB) also reduced lending rates post the August MPC, while Canara Bank stayed on hold.
• Indian Overseas Bank (IOB) cut MCLR alongside SBI; PNB, Indian Bank, and Bank of India (BoI) had already reduced MCLR in July 2025.
• The RBI kept the repo rate unchanged at its August 6, 2025, meeting after cumulative cuts earlier in the year; banks are passing part of the lower funding cost into MCLR.

SBI: Fresh MCLR Cut Takes Range to 7.90%–8.85%

India’s largest lender SBI reduced MCLR by up to 5 basis points on select tenors with effect from August 15, 2025. Post-revision, SBI’s MCLR band is 7.90% to 8.85%. For MCLR-linked borrowers, the benefit shows up on the next reset date specified in your loan agreement (commonly 3- or 12-month cycles for home loans).

Regional and vernacular reports echo the same timeline and EMI relief angle for retail borrowers starting mid-August.

What this means for you:

• If your home loan is MCLR-linked and your reset date falls after Aug 15, you should see slightly lower EMIs or a marginal tenure reduction, depending on your lender’s reset mechanics.
• The change may be modest (5 bps = 0.05%), but combined with previous trims across the system, it adds up over time.

HDFC Bank

Effective August 7, 2025, HDFC Bank revised MCLR lower by up to 5 bps on select tenors. Recent schedules indicate overnight ~8.20%, 1-month ~8.25%, 3-month ~8.35%; the one-year MCLR is in the 8.55%–8.75% range. That one-year rate is the most common benchmark for home loans.

Bank of Baroda (BoB)

BoB reduced MCLR post the August MPC, aligning with the system-wide softening trend to stay competitive in retail credit. Exact tenor-wise numbers vary by internal schedule; check your sanction letter or BoB’s latest rate card for your reset tenor.

Indian Overseas Bank (IOB)

IOB cut MCLR alongside SBI in mid-August, offering relief for borrowers at their next reset.

Note: Some outlets carried conflicting language on “revised” vs “cut” for different banks; always refer to your bank’s official MCLR schedule and your loan reset date for the precise impact.

Canara Bank reportedly held rates steady around the August policy, in contrast to peers.

Two things decide your immediate relief:

1. Benchmark: Is your loan MCLR-linked or external-benchmark linked (EBLR/RLLR)? If you’re on EBLR (repo-linked), August MCLR changes don’t apply directly.
2. Reset Frequency & Date: MCLR-linked contracts usually reset annually (some quarterly). The lower MCLR applies only from your next reset date, not immediately on the announcement day.

Illustration (home loan):

• Principal outstanding: ₹30 lakh
• Remaining tenure: 20 years
• Current effective rate: say 9.00% (1-yr MCLR + spread)
• If 1-yr MCLR falls 5 bps and your spread stays the same, new rate becomes 8.95% at reset.
• EMI drop is modest (a few hundred rupees), but interest savings compound over the remaining tenure.

SBI’s mid-August trim and HDFC’s early-August revision will filter through to MCLR borrowers at the next reset; for repo-linked loans, changes hinge on RBI’s next move or spread revisions.

• Balance-sheet mix & funding costs: Banks with cheaper deposits or improved CASA may pass on small cuts to defend market share.
• Competitive dynamics: Home-loan pricing is fiercely competitive; even 5 bps can sway refinancers.
• ALM & margin management: Not every bank can trim at the same time without hurting NIMs. That’s why Canara stayed on hold while peers cut.

• MCLR-linked loans adjust at scheduled resets; changes are influenced by the bank’s internal cost of funds.
• EBLR (repo-linked) loans are more responsive to RBI repo changes and typically adjust in the next billing cycle after the repo move, but banks can alter spreads too.

If you want faster transmission, you can request a switch (where allowed) from MCLR → EBLR, but weigh switch fees, fresh documentation, and your current spread before deciding.

1. Check your benchmark & reset date in your sanction letter.
2. Ask for the latest MCLR applicable to your tenor (1-yr/6-mo etc.) and confirm the spread.
3. Request a rate reset if you’re past the reset window or if the bank has a customer-friendly switch policy.
4. Consider refinancing only if the rate gap ≥ 50–75 bps and you plan to hold the loan for enough years to recover processing & legal costs.
5. Maintain a strong credit score to negotiate better spreads.

The RBI MPC held the repo rate unchanged at the August 6, 2025, meeting (after cumulative cuts earlier this year). While the stance remained cautious, liquidity conditions and competitive pressures have nudged banks to pass on incremental relief through MCLR. Expect banks to fine-tune rates again if funding costs drift lower or turn more conservative if the rupee or global yields create pressure.

Summary

• SBI’s August 15 MCLR cut adds to a wave of small but meaningful reductions across major banks, including HDFC Bank and Bank of Baroda, with IOB also trimming rates. PNB, Indian Bank, and Bank of India were early movers in July.
• The cumulative effect is gradual EMI relief for MCLR borrowers at their next reset, while repo-linked borrowers will watch the RBI for the next move.
• In a competitive mortgage market, 5 bps matters especially if you’re mid-tenure with a sizable outstanding balance.

• SBI trims MCLR by up to 5 bps; new band 7.90%–8.85%, effective Aug 15, 2025; EMI impact explainer.
• Post-MPC, HDFC Bank and Bank of Baroda cut MCLR; Canara Bank is on hold.
• Vernacular confirmation of SBI’s August 15 effective date and EMI relief.
• HDFC Bank’s August 7 MCLR schedule and up to 5 bps reductions.
• IOB cut; Financial Express round-up of SBI/IOB/HDFC/BoB; verify with bank card for exact tenors.
• PNB, Indian Bank, BoI reductions in July; BoI official schedule.