In a move that will bring relief to millions of borrowers, the country’s largest lender, State Bank of India (SBI), has announced a significant reduction in its benchmark lending rates. Effective Monday, December 15, 2025, SBI is slashing its External Benchmark Linked Rate (EBLR) and Repo Linked Lending Rate (RLLR) by 25 basis points, signaling the start of a lower interest rate regime across the banking sector.
Key Rate Changes
Following the Reserve Bank of India’s (RBI) recent dovish policy pivot, SBI has calibrated its lending benchmarks to pass on the benefit to consumers:
- EBLR (External Benchmark Linked Rate): Reduced to 7.90% from the previous 8.15%.
- RLLR (Repo Linked Lending Rate): Lowered to 7.50% from 7.75%.
- MCLR (Marginal Cost of Funds Based Lending Rate): The one-year MCLR, a critical benchmark for many corporate and older retail loans, has been revised downwards to 8.70%, with similar cuts across other tenors.
This reduction is expected to directly impact Equated Monthly Installments (EMIs) for home, auto, and personal loan borrowers linked to these floating rate benchmarks.
Impact on Depositors
While borrowers have reason to cheer, depositors will see a marginal dip in returns. The bank has also revised interest rates on select retail domestic term deposits.
- Amrit Vrishti Scheme (444 days): Interest rate revised from 6.60% to 6.45%.
- 2 to 3-Year Deposits: Rates for deposits below ₹3 crore in this bucket have been trimmed to 6.40% from 6.45%.
Market Analysis & Economic Outlook
This move by SBI is seen as a direct response to the RBI’s repo rate cut of 25 basis points earlier this month, aimed at spurring credit growth in the economy. Analysts at Capital Mirror observe that with inflation moderating, the central bank has shifted focus towards fueling consumption and private investment.
“SBI’s decisive cut will likely trigger a reaction across the industry, forcing private peers like HDFC Bank and ICICI Bank to follow suit to remain competitive,” said R.K. Gupta, a senior banking analyst. “This is a clear signal that the high-interest cycle has peaked, which is a net positive for real estate and automobile sectors heading into 2026.”
Stock Market Wrap
The announcement comes after a strong closing for Indian equities on Friday. The BSE Sensex jumped over 400 points to close near record highs, while the Nifty 50 reclaimed the 26,000 mark, driven by global cues and the US Federal Reserve’s rate cut.
Investors will be keenly watching SBI’s stock (NSE: SBIN) on Monday morning. While lower lending rates can compress Net Interest Margins (NIMs) in the short term, the anticipated surge in loan volume is expected to offset the impact on profitability.
Summary of Revisions (Effective Dec 15, 2025)
| Benchmark | Old Rate | New Rate | Change |
| EBLR | 8.15% | 7.90% | -25 bps |
| RLLR | 7.75% | 7.50% | -25 bps |
| 1-Year MCLR | 8.75% | 8.70% | -5 bps |
