Switch your home loan from MCLR or Base Rate to repo-linked

If your home loan is still on the old Base Rate or MCLR, you can write to your bank and ask to switch it to the repo-linked (EBLR) rate, often for a small one-time fee. Banks do not move you automatically. You have to ask, and the switch can lower your interest rate and EMI. Check your latest loan statement to see which rate you are on before you start.

Short on time? Jump to the step-by-step below and send the written switch request today.

From October 1, 2019, the Reserve Bank of India ordered banks to link all new floating-rate home loans to an external benchmark, usually the RBI repo rate. This is called the External Benchmark Lending Rate, or EBLR. When the RBI cuts the repo rate, your rate is meant to fall quickly.

Old loans on Base Rate (pre-2016) or MCLR (2016 to 2019) do not work that way. They reset slowly and often sit higher than the repo-linked rate new borrowers get. The RBI circular is clear that these old loans “shall continue till repayment or renewal,” so nobody at the bank will switch you on their own.

That is the catch. A borrower from 2017 can sit on an MCLR loan years after cheaper repo-linked loans became normal, simply because they never asked to move. The same RBI rule that protects new borrowers also gives old borrowers “the option to move to External Benchmark.” You just have to use it.

Pull your latest home loan statement or the sanction letter. Look for the words Base Rate, MCLR, or EBLR / RLLR (Repo Linked Lending Rate). If it says EBLR or RLLR, you are already on the repo-linked system and do not need to switch. If it says Base Rate or MCLR, read on.

Ask your branch, or check the bank website, for the current EBLR or RLLR for a borrower with your profile. Compare it with the rate on your statement. If your current rate is clearly higher, switching can cut your EMI or shorten your loan. Do not rely on memory. Use the actual numbers on your own statement.

The RBI circular says borrowers who can prepay a floating-rate loan without penalty “shall be eligible for switchover to External Benchmark without any charges/fees, except reasonable administrative/legal costs.” Most individual home-loan borrowers on a floating rate fall in this group, because RBI rules bar prepayment penalties on floating-rate loans taken by individuals for non-business purposes. So the switch should cost little or nothing beyond small admin or legal costs. Still confirm the exact figure in your loan's Most Important Terms and Conditions (MITC) or sanction letter, or ask the branch in writing, and compare any fee against the interest you would save.

Write to your branch or loan-servicing centre asking to convert your loan from Base Rate or MCLR to the repo-linked EBLR. Keep it simple: your loan account number, your current rate, and a clear line that you want to exercise your option to move to the external benchmark. Ask them to confirm the fee and the new rate in writing before they process it.

Once the switch is done, the bank issues a revised repayment schedule. Confirm the new rate is repo-linked, check whether your EMI dropped or your tenure shortened, and save the new schedule. The RBI rule says this switch “shall not be treated as a foreclosure,” so your loan continues normally with a better rate.

A lower rate either reduces your monthly EMI or lets you keep the same EMI and finish the loan sooner. Both save interest over the life of the loan. Run your own numbers using the rate on your statement and the EBLR your bank quotes, because the gain depends entirely on the gap between the two.

There may also be a tax angle. Under Section 24(b) of the Income Tax Act, interest on a home loan for a self-occupied house can be deducted up to ₹2,00,000 a year, but only if you file under the old tax regime. The new tax regime, which is now the default, does not allow this deduction for a self-occupied home. So a lower interest rate does not change your tax much under the new regime. Check which regime you use before counting any tax benefit.

For more help understanding your rights as a citizen dealing with banks and public bodies, see The RTI Playbook.

The bank can set “mutually acceptable terms” for the switch, but it cannot pretend the option does not exist. If your branch ignores the request or gives an evasive answer, put your complaint in writing to the bank first and keep a copy.

If the bank does not resolve it within 30 days, or rejects it unfairly, you can escalate to the RBI under the Reserve Bank Integrated Ombudsman Scheme, 2021. It covers “deficiency in service,” which means a shortcoming in any financial service the bank should provide. You file online at the RBI complaints portal cms.rbi.org.in. There is no fee to the borrower. Use this only after you have given the bank its 30 days.

No. The RBI circular says old loans on Base Rate or MCLR “shall continue till repayment or renewal.” Banks do not move you on their own. You have the option to switch, but you must request it in writing.

For most individual home-loan borrowers on a floating rate, the RBI circular allows switchover “without any charges/fees, except reasonable administrative/legal costs,” because they can prepay without penalty. So expect little or no fee. Still read your MITC or sanction letter, or ask your branch in writing, to confirm the exact figure before you proceed.

Usually, when your current rate is clearly higher than the repo-linked rate. But check your own statement. If your MCLR rate is already close to the current EBLR, the one-time fee may eat up the saving. Compare real numbers, not averages.

No. The RBI rule states the switch “shall not be treated as a foreclosure of existing facility.” Your loan continues with the same account, just on a new repo-linked rate and a revised repayment schedule.

Complain to the bank in writing first. If it does not respond within 30 days or rejects you unfairly, file a complaint under the RBI Integrated Ombudsman Scheme, 2021, at cms.rbi.org.in. The scheme covers deficiency in service by banks and is free for the borrower.

• Open your latest home loan statement and note whether you are on Base Rate, MCLR, or EBLR / RLLR.
• If you are on Base Rate or MCLR, check the switch fee in your MITC or sanction letter.
• Ask your branch, in writing, for the current EBLR and to confirm any conversion fee.
• Draft a one-paragraph switch request with your loan account number and send it today.

• Reserve Bank of India, “External Benchmark Based Lending,” circular RBI/2019-20/53, DBR.DIR.BC.No.14/13.03.00/2019-20, dated September 4, 2019.
• Reserve Bank Integrated Ombudsman Scheme, 2021 (effective November 12, 2021), RBI FAQ and complaints portal cms.rbi.org.in.
• Section 24(b), Income Tax Act, 1961, interest deduction on self-occupied house property under the old tax regime.