Personal Finance News
Personal loan interest rate changes in 2025: What SBI, HDFC, ICICI, Axis, Kotak and other banks offer
4 min read | Updated on December 19, 2025, 14:36 IST
SUMMARY
For floating-rate personal loans, interest rates can change with time, too, but they’re linked to BPLR (base rate), which changes as per the lender’s cost of funds and operating costs.
Personal loans have shorter tenures, usually between 1 and 5 years.
In 2025, personal loan interest rates in India have decreased slightly. Borrowing has become cheaper for banks due to a cumulative 1.25% reduction in the repo rate since the beginning of the year, along with lower funding and operating costs.
As a result, many banks are now offering personal loans at starting interest rates of around 9.75% to 9.99% per annum.
Here is a comparison of the top 6 public and private banks and the personal loan rates they offered in January vs what they offer now (approximate rates):
| Bank Name | January Rates (Starting From) | December Rates (Starting From) |
|---|---|---|
| HDFC Bank | 10.85% | 9.99% |
| ICICI Bank | 10.85% | 10.45% |
| Kotak Mahindra Bank | 10.99% | 10.99% |
| State Bank of India | 12.60% | 10.05% |
| Axis Bank | 10.55% | 9.99% |
| Punjab National Bank | 12.50% | 10.60% |
This shows that most banks have lowered their rates in 2025, with several cutting rates by as much as 2%. While most personal loan rates previously started from 10.5%, banks now commonly offer rates ranging from 9.9% and above to customers.
Current personal loan rates
| Bank Name | Interest Rate (p.a.) | Processing Fee |
|---|---|---|
| State Bank of India | 10.05% – 15.05% | Up to 1.50% |
| HDFC Bank | 9.99% – 24.00% | ₹6,500 + GST |
| ICICI Bank | 10.45% – 16.50% | Up to 2% |
| Axis Bank | 9.99% – 22.00% | Up to 2% of loan amount |
| Kotak Mahindra Bank | 10.99% onwards | Up to 5% |
| IDFC First Bank | 9.99% onwards | Up to 2% |
| IndusInd Bank | 10.49% onwards | Up to 3.5% |
| Yes Bank | 10.85% – 21.00% | Up to 2.5% |
| Bank of Baroda | 10.40% onwards | Up to 2% |
| Bank of India | 10.85% onwards | 1% (₹2,500–₹15,000) |
| Punjab National Bank | Floating: 10.60% onwards Fixed: 11.60% onwards | 0.35% of loan amount |
| IDBI Bank | 11.00% – 15.50% | 1% |
| Bank of Maharashtra | 9.00% | Up to 1% |
How are interest rates for personal loans set
Interest rates for personal loans are set by banks on the basis of some or all of these factors:
- Credit score
- Existing debt
- Income stability
- Type of employer
Banks also consider their costs of funds and operating expenses while setting personal loan rates.
As personal loans are riskier, banks prefer risk-based pricing over MCLR and RLLR for them. Moreover, personal loans have shorter tenures, usually between 1 and 5 years.
While the Reserve Bank of India (RBI) mandates external benchmarks (like repo rate) for many retail floating-rate loans, some exceptions are available for unsecured loans (like personal loans) and credit cards.
For floating-rate personal loans, interest rates can change with time, too, but they’re linked to BPLR (base rate), which changes as per the lender’s cost of funds and operating costs.
However, floating personal loans aren’t as popular as floating loans in other categories, as borrowers usually prefer certainty in EMIs for these loans. This is primarily because personal loan rates already remain high, and lenders also prefer fixed rates to cover margins.
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