PNB, Indian Bank, and Bank of India Reduce Lending Rates Across All Tenures

In a move to make borrowing more affordable, state-owned lenders including Punjab National Bank (PNB), Indian Bank and Bank of India have reduced their Marginal Cost of Funds-based Lending Rates (MCLR) by 5 basis points effective July 2025. 

This follows recent repo rate cuts by the Reserve Bank of India and will lead to reduced EMIs for borrowers across home, auto and personal loans.

Key MCLR Reductions by Major PSU Banks Like PNB

All three banks, namely PNB, Indian Bank and Bank of India, have implemented a similar cut of 5 basis points on lending rates for various tenures. For retail borrowers, the most important benchmark is the one-year MCLR, as it is commonly used for home loan interest rate structures. PNB’s one-year MCLR is now at 8.90%, down from 8.95%. Bank of India and Indian Bank have also brought their one-year MCLR down from 9.05% to 9%.

Pivotal Details: PNB's Revised Lending Rates

Punjab National Bank, India’s second-largest public sector bank, revised its MCLR effective July 1, 2025. The overnight MCLR was lowered to 8.20%, and the one-month MCLR moved to 8.35%. The 3-month and 6-month tenures were revised to 8.55% and 8.75% respectively. The three-year MCLR now stands at 9.20%. These cuts follow the RBI’s cumulative 100 basis points repo rate reduction since February 2025.

Indian Bank's MCLR Adjustments from July 3, 2025

Indian Bank updated its MCLR with minor reductions in most tenures. The overnight rate remains at 8.20%, while the one-month MCLR dropped to 8.40%. The 3-month rate is now 8.60%, the 6-month is 8.85%, and the one-year benchmark has been brought down to 9%. This will offer cost benefits to customers availing loans indexed on these revised rates.

Read More: Paisalo Digital Signs Co-Lending Agreement with SBI to Expand SME Credit Access!

Bank of India: Uniform Reductions Across Tenures

Effective July 1, 2025, Bank of India implemented a blanket 5 basis point cut across all MCLR tenures. The overnight rate is now at 8.10%, one-month at 8.40%, and 3-month at 8.55%. The 6-month MCLR was revised to 8.80%, while the one-year and 3-year rates now stand at 9% and 9.15% respectively. These revised figures will particularly benefit borrowers with reset dates falling after July 2025.

Loan EMI Burden Likely to Ease for Borrowers

These rate reductions come as a relief for existing and new borrowers alike. Those with floating-rate loans linked to MCLR will see reduced EMIs from their next reset date. The synchronised move across multiple state-run banks will also enhance competition in retail lending and potentially nudge private lenders to reassess their rates in the coming months.

PSU Bank’s Share Price Performance

On July 4, 2025, Punjab National Bank share price opened at ₹110.40 on NSE, above the previous close of ₹110.23. During the day, it surged to ₹110.95 and dipped to ₹110.10. The stock is trading at ₹110.33 as of 11:49 AM. The stock registered a marginal change of 0.09%.

Indian Bank share price opened at ₹647.05 on NSE, above the previous close of ₹645.95. During the day, it surged to ₹653.80 and dipped to ₹646.85. The stock is trading at ₹650.25 as of 11:49 AM. The stock registered a moderate gain of 0.67%.

Bank of India share price opened at ₹118.80 on NSE, above the previous close of ₹118.49. During the day, it surged to ₹119.35 and dipped to ₹117.26. The stock is trading at ₹117.49 as of 11:49 AM. The stock registered a moderate decline of 0.84%.

Conclusion

PNB, Indian Bank and Bank of India have uniformly cut lending rates across loan tenures following the RBI’s 100 basis points repo rate reduction. The reduction in MCLR will help lower EMIs, providing financial relief to consumers and possibly boosting credit demand in the coming quarters.

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