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Following the RBI's repo rate cut, eight major banks have reduced interest rates, but it's not guaranteed that every loan's EMI will decrease immediately. When you will get relief in your EMI depends on whether your loan is linked to EBLR, RLLR, or MCLR. Understand the complete calculation in simple terms in this explainer.

Recently, the RBI reduced the repo rate by 25 basis points, bringing it down to 5.25%. Following this, common people are hoping that the burden of their loan EMIs will also be somewhat reduced. After the repo rate cut, eight banks, including SBI, Canara Bank, PNB, Indian Overseas Bank, Bank of Baroda, Bank of India, Indian Bank, and Bank of Maharashtra, have reduced their interest rates. This can directly benefit those who have taken home loans, auto loans, and personal loans.

However, everyone's EMI doesn't need to decrease immediately. Whether you will get the benefit of this reduction immediately or after some time depends entirely on whether your loan is linked to EBLR, RLLR, or MCLR. The benchmark to which your loan is linked will determine when you will get relief in your EMI. Here's an explanation of what EBLR, RLLR, and MCLR are and how you can find out which one your loan is linked to.

Learn what EBLR, RLLR, and MCLR are

What is EBLR?

EBLR stands for External Benchmark Linked Lending Rate. This is an interest rate system that is directly linked to an external benchmark such as the RBI's Repo Rate, Treasury Bill yield, or any other market rate. In EBLR, banks do not depend on their cost of funds or internal rates. Therefore, when the RBI reduces the repo rate, the interest rates on EBLR-linked loans also decrease immediately. This means that the impact of changes in interest rates is visible in real-time in the EBLR system.

What is RLLR? The Repo Linked Lending Rate (RLLR) is a type of EBLR, specifically linked to the RBI's repo rate. RLLR is immediately affected by fluctuations in the repo rate, giving borrowers a direct and quick impact of rate cuts (or increases).

Difference between EBLR and RLLR!

The difference between EBLR and RLLR is that EBLR is a broader category that includes RLLR. EBLR can include treasury yields or other external benchmarks in addition to the repo rate, while RLLR is linked only to the repo rate.

What is MCLR?

MCLR, or Marginal Cost of Funds based Lending Rate, is a methodology determined by the Reserve Bank of India that is used by commercial banks to determine loan interest rates. It came into practice in India in 2016. This has made it easier for customers to take out loans. MCLR is the minimum rate below which no bank can lend to customers. When you take a loan from a bank, the minimum interest rate charged by the bank is called the base rate. Now, banks are using MCLR instead of this base rate.

MCLR-linked loans don't become cheaper immediately

After a repo rate cut by the RBI, MCLR-linked loans do not become cheaper immediately; it takes some time. This is because most loans are revised only on the reset date. Typically, in the MCLR system, loans are linked to the 6-month or 1-year MCLR. This means that the old interest rate will remain applicable until your next reset date. The effect of the new MCLR rate will only be seen when that reset date arrives. Therefore, if your loan is linked to MCLR, you will have to wait a little for the EMI to decrease. Considering these reasons, the EBLR system was introduced in October 2019.

How to understand if your loan is linked to EBLR-RLLR or MCLR? To find out whether your loan is linked to EBLR, RLLR, or MCLR, you can check your loan statement. The statement will contain information about your loan's interest rate type. Alternatively, you can contact your bank's customer care to find out this information.

EBLR, RLLR, or MCLR - Which one did 8 banks reduce?

• Canara Bank has reduced its Repo Linked Benchmark Lending Rate (RLLR) by 25 basis points.
• Punjab National Bank has also reduced its RLLR. The bank has lowered the RLLR from 8.35 percent to 8.10 percent, which includes a 10 basis point bank spread.
• Indian Overseas Bank's RLLR is now 8.10 percent, effective from December 15, 2025.  In addition, IOB's 1-year MCLR is set at 8.80 percent and the 3-year MCLR at 8.85 percent. This will affect various types of loans.
• SBI has reduced both its EBLR and RLLR by 25 basis points. The SBI EBLR rate has decreased from 8.15 percent to 7.90 percent. The SBI RLLR rate has decreased from 7.75 percent to 7.50 percent.
• Bank of Baroda has reduced its BRLLR from 8.15 percent to 7.90 percent.
• Indian Bank has reduced its RLLR from 8.20 percent to 7.95 percent. According to the bank, these rates will be applicable across the entire asset portfolio.
• Bank of India has reduced its Repo Based Lending Rate (RBLR) from 8.35 percent to 8.10 percent. This change is effective from December 5, 2025. RBLR and RLLR are essentially the same thing; both are linked to the Reserve Bank of India's (RBI) repo rate.
• Bank of Maharashtra has provided relief specifically to retail customers. Home loan rates have been reduced from 7.35 percent to 7.10 percent, and car loan rates from 7.70 percent to 7.45 percent. Furthermore, the bank has completely waived processing fees on these loans. Conversion Facility Available
• If a customer has taken a home loan based on MCLR and wants to convert it to an RLLR or EBLR-based home loan, many banks are offering this facility. The customer will have to pay a one-time charge for the conversion. This charge may vary from bank to bank.

Repo Rate Cut by 1.25% Since February

The RBI has cut the repo rate by 1.25% from February to June. In the monetary policy reviews of February and April this year, the repo rate was cut by 0.25% each time. A ​​0.50% cut was made in the June meeting. Interest rates were kept stable in August and October, and the fourth cut was made in December. With another 0.25% cut in December, the repo rate has come down to 5.25%.

FAQs

Q1. Which loan's EMI decreases first?
The EMI of loans linked to EBLR and RLLR decreases first.

Q2. How long does it take for MCLR loan holders to benefit?
Upon the reset date, which is usually 6 months or 1 year.

Q3. Is it beneficial to convert a loan from MCLR to EBLR?
If you want to benefit from the repo rate cut quickly, then it can be beneficial.

Q4. What is the difference between EBLR and RLLR?
EBLR is a broader category that includes RLLR. EBLR may include treasury yields or other external benchmarks in addition to the repo rate. While RLLR is linked only to the repo rate.