In October 2025, many major banks of the country have given big relief to their customers. Bank of Baroda (BoB), Indian Bank and IDBI Bank have reduced their Marginal Cost of Funds Based Lending Rate (MCLR). Its direct benefit is going to be given to those people who have taken home loan or other loans on floating rate.
This cut in interest rates has come after the October meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI). In this meeting, RBI kept its key repo rate constant at 5.50%, but banks have amended the MCLR to provide relief to retail customers.
What is MCLR and what is its impact?
MCLR i.e. Marginal Cost of Funds Based Lending Rate is the rate at which banks give loans to their customers. When MCLR is low, it can reduce the EMI of floating rate loans or reduce the loan tenure. However, nowadays new floating rate loans are usually linked to EBLR (External Benchmark Linked Lending Rate), but old loan customers which are linked to MCLR will get the direct benefit of this reduction.
New MCLR rates of Bank of Baroda
Bank of Baroda has changed its MCLR rates from 12 October 2025. One month MCLR has been reduced from 7.95% to 7.90%. The six-month MCLR has been reduced from 8.65% to 8.60% and the one-year rate has now reduced from 8.80% to 8.75%. However, there has been no change in overnight and three month rates.
IDBI Bank also reduced rates
IDBI Bank has also reduced some of its MCLR rates. Overnight MCLR has been reduced from 8.05% to 8% and one month MCLR has been reduced from 8.20% to 8.15%. However, there has been no change in the rates of three months, six months and one year. One year MCLR remains at 8.75% only. These revised rates have come into effect from 12 October 2025.
Indian Bank also gave relief
Indian Bank has also given relief to its customers. The bank has reduced the overnight MCLR from 8.05% to 7.95%, while the one month MCLR has been reduced from 8.30% to 8.25%. There is no change in the three-month, six-month and one-year rates and they remain stable at 8.45%, 8.70% and 8.85% respectively. These new rates have come into effect from 3 October 2025.