Bank of Baroda Revises One-Year MCLR to 8.75%, Effective October 12, 2025, Signaling Lower Borrowing Costs

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Bank of Baroda announced a revision in its one-year Marginal Cost of Funds Based Lending Rate (MCLR) to 8.75%, effective October 12, 2025. This adjustment is expected to reduce borrowing costs for customers with MCLR-linked loans, reflecting easing monetary conditions and boosting credit demand.

Bank of Baroda, one of India’s largest public sector banks, has revised its one-year MCLR to 8.75%, effective October 12, 2025. The new rate adjustment follows a series of monetary easing steps by the Reserve Bank of India (RBI) aimed at stimulating economic growth by making credit more affordable.

MCLR is a benchmark lending rate banks use to determine the minimum interest rate for loans. A lower one-year MCLR translates to reduced interest outflows for borrowers, including home loans, personal loans, and corporate borrowings linked to this rate. This revision is part of periodic reassessments banks undertake based on funding costs, operating expenses, and policy rates.

The Bank of Baroda’s decision aligns with broader trends in the banking sector, where multiple banks have reduced MCLR following RBI’s repo rate cuts in 2025. RBI’s accommodative stance, aimed at boosting consumption and investment, has encouraged banks to pass rate benefits to consumers, providing relief amidst inflationary pressures.

By setting the one-year MCLR at 8.75%, Bank of Baroda offers enhanced credit competitiveness, fostering potential upticks in loan disbursements. This can support sectors like housing, MSMEs, and personal finance, which constitute significant parts of the bank’s loan portfolio.

Notable Updates:

One-year MCLR reduced to 8.75%, effective October 12, 2025, from previous rates around 8.8-8.9%.
The move follows RBI’s policy rate reductions and is consistent with market expectations for lower lending costs.
Borrowers with MCLR-linked floating rate loans will benefit from lower interest expenses.
The bank’s revision comes amid a broader sectoral trend of easing lending rates.
Anticipated boost to loan demand in retail, housing, and corporate credit segments.
Bank of Baroda continues to review MCLR rates periodically in response to funding and policy dynamics.

Important Points:

MCLR acts as the floor lending rate, directly affecting EMIs and interest costs for borrowers.
Rate cuts often stimulate economic activity by encouraging credit uptake and investment.
Borrowers should monitor loan agreements to understand how the revised MCLR impacts their repayment obligations.
Transparency in MCLR adjustments aids consumers in making informed financial decisions.
Bank of Baroda’s competitive lending rates strengthen its market position in the banking industry.

Sources: Angel One, Economic Times Wealth News, MoneyControl, BankBazaar, India Infoline

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Bank of Baroda Revises One-Year MCLR to 8.75%, Effective October 12, 2025, Signaling Lower Borrowing Costs

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