SBI Cuts MCLR, Existing Home Loan EMIs to Fall

Updated on: 06 Dec 2023 // 3 min read // #mmm news
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State Bank of India (SBI)- the largest lender in the country, has yet again offered a respite to its Home Loan and other retail loan customers by slashing Marginal Cost of Funds based Lending Rate, i.e. MCLR, by 15 basis points across all tenors.

According to the official statement by the bank, the new one-year MCLR will stand at 7.25 percent. The new rates will come in to effect from May 10, 2020.

The rate cut is in line with RBI’s softer interest rate regime for customers who are fighting financial disruptions caused by an outbreak of COVID 19.

This is the twelfth consecutive drop in SBI’s MCLR in the last 12 months. Just a month ago, the bank had announced a steep cut in MCLR by 35 bps across all tenors, taking the benchmark lending rate to 7.40% from 7.75%.

Tenor wise MCLR Revisions by SBI in past 3 months


6 months

1 year MCLR rate

2 year

10 May 2020




10 April 2020




10 March 2020




MCLR is a tenor-linked internal benchmark rate of the bank, and a cut in the rate will lead to a cut in the lending rate for the loans on their reset date.

Consequently, SBI, which is also one of the significant depositors for Households, has cut down the rate of return on term deposit by 20 bps for up to a 3-year tenor. The new rates for term deposits will be effective from May 12, 2020.

The bank has also announced a new deposit scheme called SBI Wecare Deposit for Senior Citizens.

MCLR Home Loans: FAQs

What does MCLR stand for

MCLR stands for the Marginal Cost of funds-based Lending Rate. It is an internal benchmark lending rate, which is also the minimum threshold of the lending rate set by the bank. Thus all loans linked with MCLR will see a change in EMI, with effect from their loan reset dates.

What is a tenor in MCLR

The interest rates of loans linked to MCLR are reset as per the tenor announced at the time of borrowing. The shorter the tenor, higher is the premium is attached. The maximum Home Loans are linked to 1-year reset. Besides other MCLR tenors are Overnight, 1 month, 3 months, 6 months, 1 year, 2 years, and 3 years.

New Home Loans are however lent at external benchmark, RLLR.

Will my Home Loan EMI fall as SBI slashes the MCLR rate?

The reduction in your Home Loan rate is effectuated as per the reset date of your loan. If Interest Rate on Your Home Loan is due to be reset after April 10, it will be reset according to the new MCLR of 7.25 %. Until the next change, all loans will keep on resetting based on the current rate.

MCLR or repo rate, which is a better rate of interest?

From October 2019, all new Home Loans are linked to RRLR, i.e., repo rate linked lending rate. Earlier, MCLR was the benchmark rate for lending. Thus, all Home Loans which are due to be reset post-April 10 will benefit with the latest rate cut. To switch from the MCLR regime to the RRLR regime, you must compare the lending rates offered by your lender. Pick the latter if and only if the difference is above 60 bps.