Since the RBI's Monetary Policy Committee cut the repo rate, government and private banks have started reducing their interest rates. Now, another name has been added to this list. The public sector Union Bank of India has announced a reduction in interest rates on select retail loan products. The bank said in a statement that in light of the Reserve Bank of India's recent policy rate cut, it has reduced interest rates on home loans, car loans, and personal loans. This will provide significant relief to retail loan borrowers. The new rates came into effect on December 18, 2025. Let's find out how much interest has been reduced by Union Bank.

How much cheaper are car and personal loans?
Under the revised interest rates, the interest rate on home loans has been reduced by 0.3 percent. It will now start at 7.15 percent per annum, compared to the previous rate of 7.45 percent per annum. Similarly, interest rates on vehicle loans have been reduced by 0.4 percent and will now start at 7.50 percent per annum, compared to the previous rate of 7.90 percent per annum. The interest rate on personal loans has been reduced by 1.6 percent and will now start at 8.75 percent per annum, compared to the previous rate of 10.35 percent per annum. In addition, Union Bank of India is offering an additional discount of 0.10 percent per annum on eligible green finance housing loans and vehicle loans.

Why has the bank reduced interest rates now?
This reduction comes after the Reserve Bank of India's six-member Monetary Policy Committee (MPC) decided to cut the repo rate by 25 basis points to 5.25 percent in its latest meeting on December 5. This was the fourth interest rate cut in 2025, bringing the total reduction in the policy rate this year to 125 basis points.

What did Union Bank say?
The bank said that with this revision, Union Bank of India aims to support home buyers, vehicle buyers, and personal loan customers by reducing borrowing costs while maintaining prudent lending standards. The revised rates are effective from December 18 and are subject to customer eligibility, credit profile, and other applicable terms and conditions. The bank further stated that it is one of the first banks in the sector to reduce interest rates on home loans, car loans, and personal loans to enhance affordability for retail borrowers, responding to the recent monetary easing.

SBI also cut rates
Earlier, the country's largest lender, State Bank of India (SBI), had cut its Marginal Cost of Funds-Based Lending Rate (MCLR) by five basis points across all tenors and the maximum deposit rate by 15 basis points. SBI's Amrit Varsha scheme, which offered an interest rate of 6.6 percent for 444 days, has been revised to 6.45 percent. Additionally, SBI reduced the interest rate on deposits for a period of less than two years to three years from 6.45 percent to 6.40 percent, while other deposit tenors remained unchanged.

Disclaimer: This content has been sourced and edited from TV9. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.