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SBI gives big relief to home buyers, cuts interest rates by 0.25%

SBI and IOB have provided significant relief to retail loan borrowers. Both banks have reduced their home loan, car loan, and personal loan interest rates by 25 basis points. They have also revised fixed deposit interest rates. Let us explain the new interest rates for both banks.

By Kerala Tak Dec 13, 2025, 11:05 IST

The country's largest lender, State Bank of India (SBI), has cut its interest rate by 25 basis points following the Reserve Bank's policy rate cut, making loans cheaper for existing and new borrowers. 

With this fresh rate cut, SBI's external benchmark linked interest rate (EBLR) will fall by 25 basis points to 7.90 percent. SBI said in a statement that the revised rates will be effective from December 15, 2025. 

This interest rate cut follows last week's decision by the RBI to cut the repo rate by 25 basis points for the fourth time this year to support growth.

SBI also changed the interest rates in these

  1. The bank has also reduced the MCLR by 5 basis points across all tenors. With this change, the MCLR for one-year maturities will be reduced to 8.70 percent from the current 8.75 percent.
  2. The bank has announced that it has reduced the Base Rate/BPLR from the existing 10 per cent to 9.90 per cent, effective December 15.
  3. The bank also cut its fixed deposit interest rate by 5 basis points to 6.40% for fixed deposits with a minimum maturity period of 2 years to 3 years, effective December 15. However, the bank kept interest rates unchanged on other maturity schemes, indicating pressure on deposit collection.
  4. The interest rate of Amrit Varshiti, a special scheme of 444 days, has been revised from 6.60 per cent to 6.45 per cent from December 15.

IOB also gave relief in interest rates

Another public sector bank, Indian Overseas Bank (IOB), also announced a reduction in its loan rates effective December 15, 2025. The bank has reduced its EBLR – specifically, the repo-linked lending rate (RLLR) – by 25 basis points, from 8.35 percent to 8.10 percent. 

In a statement, IOB said that the full benefit of the repo rate cut is being passed on to customers. Additionally, the bank has approved a reduction of 5 basis points in the MCLR for all tenors from three months to three years.

The bank said these revisions will reduce EMIs for existing and new borrowers whose loans are linked to these benchmarks. Retail customers seeking home, vehicle, and personal loans will benefit from increased affordability. 

MSME and corporate borrowers will also experience a reduction in their cost of funds, which will help meet working capital requirements and support business growth.