PNB and Bank of India Reduce Lending Rates Effective September 2025

Punjab National Bank (PNB) and Bank of India (BoI) have lowered their marginal cost of funds-based lending rates (MCLR) across different tenures, as per news reports. The changes took effect from September 1, 2025. These revisions apply to borrowers whose loans are still linked to the MCLR framework.

RBI Policy Context

The rate changes follow the Reserve Bank of India’s decision to keep the repo rate unchanged at 5.5% during its monetary policy meeting on August 6, 2025. Despite the unchanged policy rate, banks have adjusted their lending benchmarks.

About MCLR

MCLR is the minimum lending rate a bank can offer for floating-rate loans like housing, personal, or auto loans. A reduction generally results in lower equated monthly instalments (EMIs) for existing borrowers. 

New floating-rate loans, however, are linked to the External Benchmark Lending Rate (EBLR). Borrowers are allowed to shift from MCLR to EBLR.

Punjab National Bank MCLR Cuts

PNB has reduced its MCLR by up to 15 basis points. The overnight rate has been brought down from 8.15% to 8.00%. The one-month MCLR fell from 8.30% to 8.25%, while the three-month rate moved from 8.50% to 8.45%. The six-month rate dropped from 8.70% to 8.65%, the one-year rate from 8.85% to 8.80%, and the three-year rate from 9.15% to 9.10%.

Read more: Indian Overseas Bank Share Price in Focus As MCLR And Base Rate Reduced!

Bank of India Adjustments

Bank of India reduced its MCLR rates between 5 and 15 basis points, except for the overnight rate, which remains unchanged at 7.95%. The one-month MCLR has been lowered from 8.40% to 8.30%. The three-month rate declined from 8.55% to 8.45%, the six-month from 8.80% to 8.70%, the one-year from 8.90% to 8.85%, and the three-year from 9.15% to 9.00%.

Conclusion

With effect from September 2025, both PNB and BoI have reduced their lending rates across most loan tenures. Borrowers under the MCLR regime will see lower repayment rates as a result of these adjustments.

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