Those taking home loans on old floating-vet EMI are going to get possible relief as major banks like HDFC, Bank of Baroda (BOB), Punjab National Bank (PNB), Indian Overseas Bank (IOB), and Bank of India (BOI) have cut their Marginal Cost of Funds-based Landing Rates (MCLR) in September. These adjustments of 5–15 basis points (BPS), between declining inflation and stable repo rate of RBI, can reduce monthly outflow or accelerate repayment of loans before 2019.

MCLR vs EBLR: what borrowers should know

MCLR sets the minimum limit of interest on old loans, in which the cut directly affects EMI during the reset cycles. New debt is connected to the external benchmark borrowing rate (EBLR), which reflects the RBI repo rate further. Switching on EBLR levies a lump sum fee, but it gives the benefit of faster rates.
MCLR update:

Hdfc bank (Effective from 7 September): 8.65%by deducting 5 basis points in interest rates of 6 months and 1 year; 8.70%in 2 years interest rates. Overnight/1 month interest rates stable at 8.55%; 3 months interest rates 8.60%; 3 years interest rates 8.75%.

SBI no change; Rates from 7.90% (overnight/1 month) to 8.85% (3 years), 3 months interest rates 8.30%, 6 months interest rates 8.65% and 1 year interest rates 8.75%.

Bank of Baroda (Effective from September 12): Overnight interest rates reduced by 10 basis points to 7.85%; 3 months interest rates reduced by 15 basis points to 8.20%. 1 month 7.95%, 6 months 8.65%, 1 year 8.80%unchanged.

Indian Overseas Bank (Effective from 15 September): Overnight interest rate was reduced to 8.00% to 8.00%; 1/2/3 year, 5 basis marks for each year were reduced to 8.85%/8.85%/8.90%. Stable for short periods: 1 month 8.30%, 3 months 8.45%, 6 months 8.70%.

IDBI Bank (Effective from 12 September): Unchanged – Overnight interest rate 8.05%, 1 month 8.20%, 3 months 8.50%, 6 months 8.70%, 1 year 8.75%, 2 years 9.30%, 3 years 9.70%.
Punjab National Bank (Effective from 1 September): The overnight interest rate was reduced to 8.00% to 8.00%; 8.25%for 1 month, 8.45%for 3 months, 8.65%for 6 months, 8.80%for 1 year, 9.10%for 3 years.

Bank of india (Effective from 1 September): deduction of 5–15 basis points in most periods (no change in overnight interest rate); 8.39%for 1 month, reduction of 5 basis points for 3 months, 8.70%for 6 months, 8.85%for 1 year.

Next step for borrowers: Keep an eye on your reset date for self -reduction in EMI. Consider switching on EBLR to get early benefits from RBI, but also keep the charges in mind. With increasing demand in the festive season, these changes indicate further debt cost reduction.