SBI Lending Rate Cut: Loans Get Cheaper After RBI’s December Policy Move

State Bank of India on Tuesday cut its lending rates by up to 25 basis points, effective December 15, passing on the Reserve Bank of India’s latest repo rate reduction to borrowers and businesses.

India’s largest lender, State Bank of India, announced a fresh lending rate reduction days after the Reserve Bank of India lowered the policy repo rate by 25 basis points to support economic growth. 

The SBI lending rate cut matters because SBI accounts for nearly one-fifth of the country’s banking loans, and changes in its benchmarks directly influence borrowing costs across the system. With the revision, home loans, auto loans, personal loans, and MSME credit linked to external benchmarks will become cheaper from mid-December.

SBI Lowers EBLR, MCLR and Base Rate From December 15

According to an SBI statement issued on December 9, 2025, the bank has reduced its External Benchmark Linked Rate by 25 basis points to 7.90 percent. This follows the RBI’s Monetary Policy Statement released on December 6, 2025, under RBI Press Release No. 2025-2026/112, available on the RBI website under the Monetary Policy section.

The bank has also reduced the Marginal Cost of Funds Based Lending Rate across all tenures by 5 basis points. The one-year MCLR now stands at 8.70 percent, down from 8.75 percent. In addition, SBI lowered its Base Rate and Benchmark Prime Lending Rate to 9.90 percent from 10 percent.

These revisions will automatically reduce EMIs for existing borrowers whose loans are linked to EBLR and MCLR, while new borrowers will benefit from lower starting rates.
 

SBI also trimmed fixed deposit rates by 5 basis points for deposits maturing between two and less than three years, bringing the rate down to 6.40 percent. Other deposit tenures remain unchanged, indicating continued pressure on deposit mobilisation.

RBI’s 2025 Rate Cut Cycle and Policy Background

The RBI’s December decision marked the fourth repo rate cut in 2025. As per the Monetary Policy Statement dated December 6, 2025, the central bank has reduced the policy rate by a cumulative 100 basis points this year to stimulate growth amid global uncertainty.

The RBI has repeatedly emphasised faster transmission of policy rate cuts to end borrowers. In earlier reviews, Governor Shaktikanta Das had urged banks to ensure that lending rates linked to external benchmarks adjust quickly, helping households and businesses manage borrowing costs more efficiently.

The latest SBI lending rate cut reflects improved transmission, especially as a large share of retail loans are now linked to the repo rate.

A similar move was announced by Indian Overseas Bank, which reduced its Repo Linked Lending Rate by 25 basis points to 8.10 percent, effective December 15, 2025.

What This Means for Retail Borrowers and Businesses

Lower lending rates will reduce EMIs for home loan, vehicle loan, and personal loan borrowers. MSMEs and corporates will benefit from lower working capital costs, supporting cash flows and expansion plans.

Borrowers struggling with high-interest unsecured debt may also look at better repayment strategies. For example, consolidating credit card dues can improve repayment discipline and reduce interest burden, as explained in the LoansJagat article.

Expected Impact of SBI Rate Cut

SBI said the rate revision aims to ensure customers benefit quickly from RBI’s policy easing. The RBI, in its December policy statement, reiterated that rate cuts are intended to support growth while maintaining inflation within the target range.

Conclusion

The SBI lending rate cut strengthens RBI’s policy transmission and brings timely relief to borrowers. Lower borrowing costs are expected to support demand and investment in the coming quarters.
 

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