Punjab National Bank has reduced its External Benchmark Linked Rate (EBLR) with effect from March 1, 2025. All new floating rate loans from a bank are now linked to EBLR and any change in EBLR will corresponding impact on the EMIs. In case a bank cuts EBLR the borrower will see their EMIs fall or tenure come down based on the choice they make after the rate cut.
PNB on the other hand, has increased its marginal cost of funds based lending rate (MCLR) for loans with effect from March 1, 2025. Before the EBLR regime came in force banks were lending on the basis of MCLR which has been used as a benchmark interest rate by banks to determine the minimum rate at which they can lend money. However, those old borrowers who have their floating rate loans still linked to MCLR regime has now got the option to shift to EBLR regime whenever they wish.
Read below to know what are the new PNB EBLR and MCLR rates
PNB EBLR rate as of March 1, 2025
According to PNB website the EBLR rate for two benchmarks- Treasury bills (T-Bills) and Repo linked rate both has been revised with effect from March 1, 2025
Here’s a table showing the revised T-bill linked lending rates (TBLLR)
PNB Prime Plus rate based on 3 Month T-Bill rate 6.5%
Tenor Premium
| 6 Month | 0.1% |
| 12 Month | 0.1% |
Source: PNB WebsitePNB Repo Linked Lending Rate-RLLR
Tenor premium
| ≥1yr & 3yr | 0.00% |
| ≥3yr & 5yr | 0.6% |
| ≥5yr & 10yr | 1% |
| ≥10yr & ≤15yr | 1.5% |
Source: PNB website
Punjab National Bank
PNB MCLR rate as of March 1, 2025
According to the PNB website, here’s a table showing the new MCLR rates which have been increased by 0.05% across all tenors.
MCLR Tenor Old rate (February 1, 2025) New rate (March 1, 2025)
MCLR Tenor | Old rate (February 1, 2025) | New rate (March 1, 2025) |
Overnight | 8.35% | 8.4% |
One month | 8.45% | 8.5% |
Three month | 8.65% | 8.7% |
Six month | 8.85% | 8.9% |
One year | 9% | 9.05% |
Three years | 9.3% | 9.35% |
Source: PNB website
How is MCLR calculated?
According to Axis Bank website as of March 1, 2025, Banks calculate the MCLR based on the tenure of the loan. However, MCLR is internal to the bank. The actual lending rate includes the spread over and above the MCLR. MCLR is calculated by taking into account these components:
- Marginal cost of funds: The cost of funds are important in determining the MCLR in banking. It is the average rate at which the deposits with similar maturities were raised during a specific period. Basically, it involves the cost at which banks obtain funds for lending.
- Negative carry on cash reserve ratio (CRR): Banks are required to maintain a certain portion of cash reserves with the RBI on which they do not earn any interest. The cost associated with this non-earning reserve is considered as negative CRR.
- Operating costs: Third factor is the operational costs incurred by the bank. This normally includes administrative costs, office expenses, employees salaries, rental expenses, utility, etc.
- Tenure premium: The longer the tenure, the higher the risk of loan. Therefore, the bank charges a premium to cover this risk, known as tenure premium. It is determined based on the average maturity of the bank liabilities.
