Bank of India Cuts MCLR from July 1: Home and Personal Loan EMIs to Get Cheaper

Updated: 02-07-2025, 07.04 AM

New Delhi – In a move that brings welcome relief to borrowers, Bank of India (BOI) has reduced its Marginal Cost of Funds-based Lending Rate (MCLR) by 5 basis points (0.05%) across multiple tenures. The revised rates came into effect from July 1, 2025, and are expected to lower the EMIs on home loans, personal loans, and other MCLR-linked credit products.

Bank-of-India

What This Means for Borrowers

The reduction in MCLR directly impacts the interest rates on floating-rate loans tied to MCLR, such as housing loans, car loans, education loans, and personal loans. With this cut, monthly EMI payments will become slightly more affordable, offering relief amid persistent inflationary pressure.

According to the regulatory filing submitted to the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), the Fixed Rate Spread (FRS) for retail loans has been revised to 1.50%. Under the updated structure, the 3-year MCLR—a key benchmark for many retail loans—now stands at 10.65%.

However, the final lending rate for each customer will vary depending on their Credit Risk Premium (CRP), which is determined by individual credit scores and risk profiles.

No Change in Repo-Based Lending Rate

Bank of India also clarified that there has been no change in its Repo-Based Lending Rate (RBLR). This means loans linked to the repo rate will continue at existing rates. RBLR typically applies to select retail and corporate loans, and any changes in this benchmark usually follow the Reserve Bank of India’s repo rate adjustments.

Why the Cut Matters

The reduction in MCLR is in line with recent liquidity trends and lower funding costs in the banking system. Industry experts believe this move follows the Reserve Bank of India’s earlier steps to ease borrowing costs, and reflects the Bank of India’s efforts to remain competitive and supportive of credit growth.

Such interest rate cuts:

Benefit new loan seekers by offering more attractive borrowing costs
Lower EMIs for existing borrowers with MCLR-linked floating rate loans
Encourage consumer spending and investment, giving a boost to the economy

Broader Market Trend

Several banks have been adjusting their lending rates recently in response to changing market dynamics and the RBI’s monetary policy cues. With loan demand rising in sectors like housing, auto, and small business, competitive rate offerings are becoming a key tool for banks to attract customers.

Final Word

If you’re planning to take a loan or already have one from Bank of India, this MCLR cut will likely ease your financial burden. It’s also a sign of reviving credit sentiment in the country. Borrowers are advised to check with the bank for revised EMIs and ensure that their loans are linked to the applicable benchmark (MCLR or RBLR).

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Kuldeep Singh Chundawat: My name is Kuldeep Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.