**HDFC, PNB, and Other Banks Reduce MCLR, Lowering EMIs for Borrowers**
*By Akash Pandey | Sep 20, 2025, 04:14 PM*
Several leading banks, including HDFC Bank, Punjab National Bank (PNB), Bank of Baroda, Indian Overseas Bank (IOB), and Central Bank of India, have announced reductions in their Marginal Cost of Funds-based Lending Rates (MCLR) in September. This move is expected to benefit borrowers by lowering their EMIs or shortening loan tenures on floating rate loans such as home, personal, and vehicle loans.
### Understanding MCLR
MCLR is a benchmark rate banks use to determine interest rates on floating-rate loans. It considers the bank’s cost of funds, operating expenses, and profit margin. When banks cut MCLR, existing borrowers generally benefit from reduced EMIs or shorter loan durations.
However, it is important to note that most new floating-rate loans are now linked to the External Benchmark Lending Rate (EBLR) rather than MCLR.
### Recent Rate Cuts
**Punjab National Bank (PNB)** has reduced its MCLR by 5 to 15 basis points (bps) across most tenures, effective September 1. The revised rates include:
– One-year MCLR: 8.80%
– Overnight MCLR: 8.00%
– Three-month MCLR: 8.45%
**Bank of Baroda** cut its overnight MCLR by 10 bps to 7.85% and the three-month rate by 15 bps to 8.20%, effective September 12.
### Additional Bank Rate Reductions
**Bank of India (BOI)** has also lowered MCLR rates across most tenures (except overnight) by 5 to 15 bps, effective September 1. Notably, the three-year MCLR stands at 9.00%.
**HDFC Bank** reduced its MCLR by 5 bps on select tenures. The updated rates for the six-month and one-year tenures are 8.65%, while the two-year rate is now 8.70%.
### Further Adjustments by IOB and Central Bank of India
**Indian Overseas Bank (IOB)** cut its overnight, one-year, two-year, and three-year MCLR by 5 bps, effective September 15. The current rates are:
– One-year MCLR: 8.85%
– Two-year MCLR: 8.85%
– Three-year MCLR: 8.90%
**Central Bank of India** has also announced cuts across select tenures; however, detailed rate information is yet to be released.
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These MCLR reductions come at a time when borrowers with floating-rate loans linked to MCLR can expect relief in the form of lower EMIs or reduced loan tenures. Borrowers with loans tied to the newer External Benchmark Lending Rate should watch for separate updates from their respective banks.
https://www.newsbytesapp.com/news/business/hdfc-pnb-bob-reduce-mclr-this-month-check-new-rates/story
