The headlines are giving a little cheer to borrowers—and rightly so. India’s largest bank, the State Bank of India (SBI), has lowered its major lending benchmarks, making home, auto, and MSME loans cheaper, effective December 15.
But, let’s be real, this is a bittersweet announcement. The savings side took a small hit.
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The Relief for Borrowers
This is where the good news is focused. SBI didn’t hold back on adjusting the rates that directly impact loan EMIs:
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EBLR Takes a Dive: The External Benchmark Lending Rate (EBLR), which is used to price most of the new, floating-rate retail loans, saw a major reduction of 25 basis points (bps). It is now down to 7.90% from 8.15%. This is the bank fully passing on the benefit of the RBI’s repo rate cut.
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MCLR Eased: The Marginal Cost of Funds-based Lending Rate (MCLR), which governs many existing loans, was cut by a modest 5 bps across all tenors. For instance, the crucial one-year MCLR, used for many retail loans, is now 8.70% (down from 8.75%).
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Legacy Borrowers: Even the old Base Rate was cut, moving to 9.90% from the previous 10.00%.
Lowering these rates means cheaper borrowing costs for MSMEs and reduced Equated Monthly Instalments (EMIs) for millions of retail customers.
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The Deposit Squeeze
The thing is, deposit rates had to budge too.
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Select FD Cuts: SBI marginally reduced interest rates on domestic retail term deposits below ₹3 crore for the 2 to less than 3 years tenor. For the general public, the rate is now 6.40% (down from 6.45%), and for senior citizens, it’s 6.90% (down from 6.95%).
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Special Scheme Hit: The popular 444-day “Amrit Vrishti” special deposit scheme also saw a cut, falling to 6.45% from 6.60%.
The bank kept other retail term deposit slabs unchanged, which suggests they are trying to balance the deposit pressure while passing on the loan benefits.
This is a major financial marker: Cheaper loans are definitely a boost for the economy and for homeowners, but it signals a continued downtrend in returns for those who rely on fixed income….
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Disclaimer: This information is based on the revised interest and lending rates announced by the State Bank of India, effective December 15, 2025.
