In a move that could provide relief to borrowers, three state-owned lenders – Bank of Baroda, Punjab National Bank (PNB), and Canara Bank – have announced reductions in their marginal cost of funds-based lending rates (MCLR) across various tenures. The MCLR is a benchmark rate used by banks to set interest rates on floating-rate loans such as home loans, personal loans, and auto loans. A decrease in MCLR can translate to a potential drop in equated monthly installments (EMIs) or a shorter loan tenure, benefiting borrowers in the long term.
Bank of Baroda has reduced its one-year MCLR by 5 basis points to 8.95%, while other tenures remain unchanged. The overnight MCLR stands at 8.15%, the one-month MCLR at 8.35%, the three-month MCLR at 8.55%, and the six-month MCLR at 8.80%. These rates are effective from May 12, 2025.
Canara Bank has lowered its overnight MCLR from 8.30% to 8.20% and its one-month MCLR from 8.35% to 8.25%. The three-month MCLR is now at 8.45%, down from 8.55%, while the six-month MCLR has been lowered to 8.80% from 8.9%. The one-year MCLR has been reduced from 9.10% to 9.00%, and the two-year and three-year MCLR have been brought down by 10 basis points each.
Punjab National Bank has reduced its overnight MCLR from 8.40% to 8.25% and its one-month MCLR from 8.50% to 8.40%. The three-month MCLR now stands at 8.60%, down from 8.70%, and the six-month MCLR has been revised to 8.80% from 8.90%. The one-year MCLR has been cut from 9.05% to 8.95%, and the three-year MCLR has been brought down by 10 basis points, from 9.35% to 9.25%. The new rates are effective from May 1, 2025.
The reduction in MCLR rates by these public sector banks is expected to provide relief to borrowers, especially those with existing floating-rate loans. However, it is essential to note that the actual impact on borrowers will depend on the bank’s discretion and the specific loan terms. Borrowers should check with their banks to determine the exact reduction in their EMIs or loan tenure. Overall, the reduction in MCLR rates is a positive step towards making loans more affordable for borrowers.