RBI cut the repo rates by 50 basis points or 0.5% on June 6, 2025. This means that now banks will be charged just 5.5% interest rate if they borrow any loan from the RBI.

This decision came after the Monetary Policy Committee (MPC) concluded its bi-monthly review, citing moderated inflation and the need to spur borrowing in a fragile macroeconomic environment.

To carry forward this benefit to the account holders, commercial banks have now pulled down their lending rates, recently. With some banks already reducing their rates, you could potentially save up to ₹10 lakh over your loan tenure just by understanding where and how this change affects you.

Read on to find out how.

How Many Banks Have Reduced Their Lending Rates?

Following the RBI’s move, Canara Bank, Union Bank of India, and Indian Overseas Bank (IOB) were among the first to pass on the benefits to borrowers. Here’s a summary of the rate reductions:

Bank	Benchmark Type	Previous Rate	Current Rate	Change (bps)
Canara Bank	MCLR (1-Year)	8.55%	8.35%	-20
Union Bank of India	EBLR	9.25%	8.75%	-50
Indian Overseas Bank	RLLR	9.10%	8.60%	-50

Note: MCLR = Marginal Cost of Funds Based Lending Rate; EBLR = External Benchmark Linked Rate; RLLR = Repo Linked Lending Rate.

Read this blog to know the revised lending rates of all the other banks

Savings on Loan EMI After Repo Rate Cut

Let’s take a fictional character Amit Verma, a salaried individual with a ₹1 crore home loan for 20 years. Below is how the rate cut translates into EMI savings:

Bank	Rate Before	EMI Before	Rate After	EMI After	Monthly Savings	Total Savings Over 20 Years
Canara Bank (MCLR)	8.55%	₹ 87,000	8.35%	₹ 85,000	₹ 1,352	₹ 3,24,480
Union Bank (EBLR)	9.25%	₹ 91,000	8.75%	₹ 88,000	₹ 3,414	₹ 8,19,360
IOB (RLLR)	9.10%	₹ 90,000	8.60%	₹ 86,000	₹ 3,499	₹ 8,39,760

On which lending rate is your loan based? Read the next section to know the difference.

What is the Difference Between MCLR, EBLR, and RLLR?

Parameter	Full Form	Linked To	Introduced In	Review Frequency	Transparency	Best For	Why Introduced?
MCLR	Marginal Cost of Funds Based Lending Rate	Internal Cost of Funds	2016	Monthly/Quarterly	Moderate	Short-to-Mid Term Loans	To improve the outdated base rate system and bring semi-transparency
EBLR	External Benchmark Linked Rate	External Benchmarks (e.g. RBI Repo)	2019	Dynamic (As per Benchmark)	High	Floating Rate Retail Loans	To enforce full rate transmission and transparency post-RBI recommendations
RLLR	Repo Linked Lending Rate	Directly to Repo Rate	2019	Changes with Repo Rate	Very High	Home/Personal/Auto Loans (Floating)	To ensure faster and complete transmission of monetary policy benefits to borrowers

On What Rate Should You Base Your Loan?

Let’s analyze the effect of a 50 bps repo cut on a ₹1 crore loan for 20 years, comparing EMI impact across MCLR, EBLR, and RLLR-linked loans:

Loan Type	Before Rate Cut	After Rate Cut	EMI Before (₹)	EMI After (₹)	Difference (₹/month)	Total Interest Saved Over Tenure (₹)
MCLR-based	8.55%	8.35%	87,254	85,902	1,352	3,24,480
EBLR-based	9.25%	8.75%	91,816	88,402	3,414	8,19,360
RLLR-based	9.10%	8.60%	90,366	86,867	3,499	8,39,760

Conclusion: RLLR and EBLR-based loans show faster and more substantial transmission of repo rate changes than MCLR-based ones. However, borrowers should also factor in frequency of revision, tenure flexibility, and prepayment conditions.

Conclusion

With the RBI’s proactive rate cut and major public sector banks like Canara Bank, Union Bank, and IOB passing on the benefit, borrowers now stand at a crucial crossroads. Choosing the right lending rate benchmark—be it MCLR, EBLR, or RLLR—can save you lakhs over your loan’s tenure.

With this cut in lending rates, smart borrowers who understand the mechanics of rate-linked loans can end up saving ₹8–10 lakh or more on a standard home loan.

Make sure you stay updated, renegotiate if needed, and always compare loan products before signing on the dotted line.

Other News Pages
RBI’s ₹1 Lakh Cr VRRR Auction Sparks Uncertainty on Rate Cut Outlook	Public vs Private Banks: Compare Cheapest Home Loan Offers After RBI 50 bps Cut	RBI Rate Cuts Hint at Lower EMIs Ahead for Home Loan Borrowers	RBI Hits a Hat-Trick with Third Repo Rate Cut in 2025-26
Cheapest Home Loan Interest Rates in June 2025 After RBI Policy Cut	Loan EMIs Set to Drop: Canara, Union & IOB Slash Lending Rates After RBI Cut	New EMI Alert: SBI Cuts Lending Rates After RBI Repo Shift	RBI Repo Rate Cut February 2025
RBI Advises Banks to Reduce Lending Rates as Economy Strengthens	RBI Cuts Repo Rate by 25 Basis Points to 6%	RBI Panel Expected to Retain 4% Inflation Target	RBI May Deliver Final 25 bps Rate Cut in December 2025
Will Inflation Lead to Another Rate Cut? RBI Governor Shares View	RBI Keeps Repo Rate Unchanged: Impact on Home Loan Borrowers	RBI MPC Decision: Crucial Shift for Gold Loan Borrowers & NBFCs	Economists Divided on RBI MPC’s Next Move: No Cut, One Cut or Two