Loans to get cheaper as these 4 banks cut their lending rates by 5 basis points

Loans to get cheaper as these 4 banks cut their lending rates by 5 basis points


At least four banks have reduced their marginal cost of funding based rates in the past few days. These banks are Canara Bank, HDFC Bank, PNB and Bank of Baroda (BOB).

After the Reserve Bank of India (RBI) cut the repo rate by 50 basis points last month (June 6), most banks followed suit by cutting their lending rates, albeit marginally. The rate cut in June was the third consecutive cut by the RBI, triggering the onset of rate cut cycle.

Consequently, Canara Bank has now reduced its overnight marginal cost of lending rate (MCLR) by 5 basis points from 8 to 7.95 percent per annum. MCLR is the minimum rate below which banks can not lend to borrowers.

This rate regime had replaced the base rate system in 2016. MCLR is a function of repo rate, which means it moves along the movement of benchmark rate. When the repo rate is raised, MCLR edges higher. Conversely, when it is cut, MCLR moves lower.

Canara Bank’s one month MCLR is 8 percent, three-month MCLR is 8.20 percent, six-month MCLR is 8.55 percent, one-year MCLR is 8.75 percent, two-year MCLR is 8.90 percent and three-year MCLR is 8.95 percent. These rates came into force on July 12, 2025.

HDFC Bank also revised its MCLR on July 7. The latest overnight and one-month MCLR is 8.60 percent, three-month MCLR is 8.65 percent, six-month, 1-year and 2-years MCLR is 8.75 percent, and 8.80 percent for three years.

PNB cut its MCLR

PNB also cut its MCLR by 5 basis points across tenure. Overnight MCLR has been cut from 8.25 percent to 8.20 percent, one-month rate is now 8.35 percent, three-month rate is 8.55 percent, six-month rate is 8.75 percent, one-year rate 8.90 percent and three-year rate (after revision) stands at 9.20 percent.

Additionally, Bank of Baroda also cut its marginal cost of lending. BOB’s overnight MCLR is 8.10 percent, one-month rate is 8.30 percent, three-month MCLR is 8.50 percent, six-month MCLR is 8.75 percent and 1-year MCLR is 8.90 percent.

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