What is MCLR?
MCLR stands for Marginal Cost of Funds-based Lending Rate. It’s the minimum interest rate that banks can charge for loans, and banks change it from time to time depending on their costs and the RBI’s repo rate. When MCLR goes down, interest rates on floating-rate loans (like home loans) can also go down, which means you might pay less every month.
Bank of Baroda:
Bank of Baroda has just cut its MCLR for overnight loans by 0.05 percent. The overnight MCLR is now 8.10 percent, down from 8.15 percent. Other MCLR tenures—like 1 month, 3 month, and 1 year—haven’t changed, so borrowers with loans linked to these rates won’t see a difference right now. The new rates started from July 12, 2025. The bank has also lowered its home loan interest rates to 7.45 percent and scrapped the processing fee, making home loans a bit more affordable.
Canara Bank:
Canara Bank also cut its MCLR by 0.05 percent across several tenures. The overnight MCLR is now 7.95 percent, the one-month MCLR is 8 percent, three-month MCLR is 8.20 percent, six-month MCLR is 8.55 percent, and the one-year MCLR is 8.75 percent. The two-year and three-year rates are now 8.90 percent and 8.95 percent. These rates are effective from July 12, 2025.
Other Banks:
HDFC Bank has also cut its MCLR—by up to 0.30 percent on some loan periods.
Punjab National Bank (PNB), the country’s second-largest public sector bank, cut its MCLR by 0.05 percent for all loan durations.
Indian Bank lowered its MCLR by 0.05 percent for select tenures, effective July 3, 2025.
Why does this matter?
If you have a floating rate loan linked to MCLR, you could see your EMIs go down or your loan finish sooner. However, the rate change applies from your next loan reset date, which usually comes every three or six months. Lower MCLR often happens when the RBI cuts the repo rate, and banks follow by dropping lending rates.
