Effective December 15, 2025, the State Bank of India (SBI), the country's largest lender, has announced a reduction in its lending and retail deposit interest rates. The move follows the Reserve Bank of India's (RBI) decision last week to cut the key interest rate by 25 basis points for the fourth time this year, aimed at supporting economic growth.

Lending Rate Reductions

SBI has reduced its External Benchmark Lending Rate (EBLR) by 25 basis points, bringing it down to 7.90%. The bank has also lowered the Marginal Cost of Funds-Based Lending Rate (MCLR) across all tenures by 5 basis points. Consequently, the one-year maturity MCLR will decrease from 8.75% to 8.70%. Similarly, one-year maturity rates have been reduced to 8.75% and 8.80%, respectively. The bank has also revised its Base Rate/BPLR to 9.90% from the existing 10%.

These revisions will lead to lower Equated Monthly Instalments (EMIs) for both existing and new borrowers whose loans are linked to these benchmarks. Retail customers seeking home, vehicle, and personal loans will benefit from enhanced affordability. MSMEs and corporate borrowers will also experience a reduction in their cost of funds, which should aid in managing working capital requirements and support business growth.

Indian Overseas Bank (IOB), another state-owned lender, has also announced a reduction in its lending rates, effective December 25, 2025. IOB has reduced its External Benchmark Lending Rate, specifically the Repo Linked Lending Rate, by 25 basis points from 8.35% to 8.10%, fully passing the policy rate cut to its customers. Additionally, IOB's Asset Liability Management Committee has approved a 5-basis-point reduction in the Marginal Cost of Funds-Based Lending Rate across tenors from three months to three years.

Retail Deposit Interest Rate Revisions

Alongside the lending rate cuts, SBI has also revised its fixed deposit rates. Fixed deposit rates for maturities from two years to less than three years have been reduced by 5 basis points, bringing them down to 6.40%. However, SBI has retained interest rates on other maturity buckets, which indicates potential pressure on deposit mobilization.

The interest rate for the specific tenor scheme '444 days' under Amrit Vrishti has been revised from 6.60% to 6.45%. For senior citizens, the Amrit Vrishti interest rate has been reduced from 7.10% to 6.95%, while for super senior citizens, it has been trimmed from 7.20% to 7.05%.

For deposits under ₹3 crore, the interest rates for the general public for the tenure of two to three years have been revised from 6.45% to 6.40%, and for senior citizens, the rate has been reduced from 6.95% to 6.90%.

SBI has reduced the interest rates for deposits under ₹3 crore with a tenure of two to three years, from 6.45% to 6.40% for the general public and from 6.95% to 6.90% for senior citizens. SBI's overnight and one-month MCLR rates have been cut from 7.90% to 7.85%. Three-month MCLR has been reduced from 8.30% to 8.25%, the six-month MCLR has been reduced from 8.65% to 8.60%. The one and two-year MCLR rates have been revised to 8.70% from 8.75%, while the three-year rate has been reduced from 8.85% to 8.80%.