Borrowers linked to Marginal Cost of Funds-based Lending Rate (MCLR) can expect relief in their loan EMIs, as major banks including Bank of Baroda (BoB), Indian Overseas Bank (IOB), and IDBI Bank have revised their MCLR rates in September 2025.
What Is MCLR and Why It Matters?
MCLR is the benchmark interest rate used by banks to price floating-rate loans such as home loans, personal loans, and auto loans. A reduction in MCLR can lead to lower EMIs or shorter loan tenures, depending on the reset cycle of the borrower’s loan.
Revised MCLR Rates – September 2025
Bank of Baroda (Effective September 12, 2025)
- Overnight MCLR: Cut by 10 bps → 7.85%
- 3-Month MCLR: Cut by 15 bps → 8.20%
- 1-Year MCLR: Unchanged at 8.80%
- Impact: Short-term loan borrowers benefit; home loan EMIs remain unchanged
Indian Overseas Bank (Effective September 15, 2025)
- Overnight MCLR: Cut by 5 bps → 8.00%
- 1-Year MCLR: Cut by 5 bps → 8.85%
- 2-Year MCLR: Cut by 5 bps → 8.85%
- 3-Year MCLR: Cut by 5 bps → 8.90%
- Impact: Borrowers with loans linked to longer tenures may see EMI relief
IDBI Bank (Effective September 12, 2025)
- Overnight MCLR: 8.05%
- 1-Month MCLR: 8.20%
- 3-Month MCLR: 8.50%
- 6-Month MCLR: 8.70%
- 1-Year MCLR: 8.75%
- 2-Year MCLR: 9.30%
- 3-Year MCLR: 9.70%
- Impact: No cuts announced, but rates remain competitive across tenures
What Borrowers Should Do
- Check your loan reset date: MCLR-linked loans adjust periodically
- Compare with EBLR-linked options: New loans are often tied to external benchmarks
- Contact your bank: For updated EMI schedules and refinancing options
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Final Takeaway
With MCLR cuts announced by BoB and IOB, borrowers may see lower EMIs on select loan tenures. While IDBI Bank has kept rates steady, the overall trend signals easing credit conditions. Stay informed and review your loan terms to make the most of these changes.