• Moumi Mousumi
• 17 Feb, 2025

State Bank of India (SBI) the country’s largest lender has announced a reduction in its External Benchmark-Based Lending Rate (EBLR) and Repo-Linked Lending Rate (RLLR) bringing much-needed relief to borrowers. This decision will lower Equated Monthly Instalments (EMIs) for home loans, car loans and personal loans making borrowing more affordable. However SBI has kept its Marginal Cost of Funds-Based Lending Rate (MCLR) Base Rate and Benchmark Prime Lending Rate (BPLR) unchanged.

What Led to This Rate Cut.?

The Reserve Bank of India (RBI) recently reduced the repo rate by 25 basis points (bps) lowering it from 6.50% to 6.25%. This marks the first reduction in repo rates in five years following a series of rate hikes totalling 250 bps after the COVID-19 pandemic. In response to this change SBI has adjusted its lending rates to benefit customers with floating-rate loans linked to EBLR and RLLR.

Revised Interest Rates – What’s Changing.?

- EBLR: Reduced from 9.15% to 8.90% (a 25 bps cut).

- RLLR: Lowered from 8.75% to 8.50%.

- MCLR, Base Rate and BPLR: No changes announced.

With these reductions, existing and new borrowers will see lower interest payments on their loans translating to reduced EMIs.

How This Benefits SBI Borrowers.?

1. Lower EMIs – Customers with EBLR- and RLLR-linked loans will see reduced monthly payments.

2. Cheaper Home Loans – Prospective home buyers can now secure loans at lower interest rates.

3. More Affordable Business Loans – Entrepreneurs and businesses can benefit from reduced borrowing costs.

4. Improved Financial Planning – Reduced EMIs help borrowers manage finances more effectively.

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Understanding EBLR & RLLR

- External Benchmark-Based Lending Rate (EBLR): Banks use this rate to determine interest on home and other loans. With the 25 bps cut SBI’s EBLR now stands at 8.90%.

- Repo-Linked Lending Rate (RLLR): Tied directly to RBI’s repo rate RLLR has been reduced to 8.50% making loan repayments more manageable.

What Should Borrowers Do.?

If you have an existing loan linked to EBLR or RLLR your EMI will automatically reduce. New borrowers should compare rates across banks before taking a loan to ensure they get the best deal.

SBI’s rate cut is a welcome move for borrowers across India. Whether you're planning to buy a home, a car or need a personal loan this decision makes borrowing more affordable. Keeping track of interest rate changes and choosing the right type of loan can help maximise savings.