In a swift response to the Reserve Bank of India's monetary policy decision, Punjab National Bank (PNB) has announced a significant reduction in its benchmark lending rate. The state-owned lender has cut its Repo Linked Lending Rate (RLLR), a move set to bring relief to millions of home loan borrowers across the country.
Immediate Action Following RBI Directive
On Saturday, December 6, 2025, PNB formally notified the stock exchanges about the revision in its lending rate. The bank's action came just a day after the RBI's Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, unanimously decided to cut the repo rate by 25 basis points to 5.25% during its bimonthly meeting on Friday, December 5.
The bank's filing clearly stated the change: "The Exchange is hereby informed that consequent upon the decrease in the Repo rate by the RBI on 05.12.2025, the Bank has revised the Repo Linked Lending Rate (RLLR) from 8.35% (including BSP of 10 bps) to 8.10% (including BSP of 10 bps) with effect from 06.12.2025." This marks a direct and full transmission of the central bank's rate cut to the bank's customers.
What This Means for Borrowers
The 25 basis points reduction in PNB's RLLR translates into lower interest costs for borrowers whose loans are linked to this external benchmark. Primarily, this affects home loan customers. A lower RLLR means reduced Equated Monthly Installments (EMIs) for these borrowers, easing their financial burden.
It is important for borrowers to understand the reset mechanism. The RLLR is typically reset every three months. Therefore, if a borrower's EMI cycle began in October, the benefit of this rate cut will be applied in the subsequent reset period, likely in January.
It should be noted that PNB's Marginal Cost of Lending Rate (MCLR) and Base Rate remain unchanged following this announcement. The reduction applies specifically to repo-linked loans.
Broader Banking Sector Trends and Understanding RLLR
PNB is not alone in this initiative. Other public sector banks, including Bank of India and Indian Bank, have also announced similar reductions in their repo-linked lending rates. For instance, Indian Bank cut its rate from 8.20% to 7.95%.
This trend is a result of an RBI circular from October 2019, which mandated banks to link all new floating-rate retail loans to an external benchmark. Most banks, including PNB, adopted the RBI's repo rate as this benchmark, leading to the creation of the RLLR. For borrowers, this means their loan interest rates are no longer solely dependent on the bank's internal calculations (like MCLR) but are more directly influenced by the RBI's monetary policy stance.
This latest repo rate cut by the RBI is its fourth since February 2025, having held rates steady in the August and October policy meetings. The central bank has maintained a 'neutral' stance, indicating room for further policy easing if required to support economic growth.
Key Takeaways for Consumers
- PNB's RLLR is now 8.10%, down from 8.35%.
- The cut is effective immediately from December 6, 2025.
- Home loan EMIs linked to RLLR will decrease after the applicable reset period.
- Borrowers should check their loan agreement to confirm if their loan is linked to RLLR, MCLR, or the Base Rate.
- Understanding the link between RBI's repo rate and your loan EMI is crucial for effective personal financial planning.
This proactive move by Punjab National Bank ensures quicker transmission of the RBI's accommodative policy to the end consumer, potentially stimulating demand in the housing and retail loan markets.
