UCO Bank has revised its Treasury Bill Linked Rate (TBLR) and Government Security (G-Sec) linked benchmark rates, effective August 7, 2026. The Asset Liability Management Committee (ALCO) reduced the 3-month TBLR by 5 basis points to 5.25% and the 12-month TBLR by 15 basis points to 5.65%. Conversely, the bank increased the 1-year UCO G-Sec Rate to 5.80% and the 10-year G-Sec Rate YTM (Annualized) Par yield to 6.96%. These adjustments alter the cost of borrowing for customers linked to these specific benchmarks, while other key rates such as the Marginal Cost of Funds based Lending Rate (MCLR) and Repo Linked Rates remain static.

The revision reflects a mixed approach to benchmark pricing, with short-term treasury-linked rates seeing a reduction while government security-linked rates experienced an increase. The ALCO’s decision impacts loan pricing for borrowers tied to TBLR and G-Sec frameworks, whereas those linked to MCLR, Base Rate, or BPLR will see no change in their interest rate structures. The bank communicated these updates to the National Stock Exchange of India Ltd. and BSE Limited on August 7, 2026.

Revised Benchmark Rates

The following table details the changes in TBLR and G-Sec linked rates effective August 7, 2026:

Unchanged Benchmarks

Several other benchmark rates were reviewed but kept unchanged by the ALCO:

• MCLR: Overnight at 7.90%, One month at 8.20%, Three month at 8.45%, Six month at 8.70%, and One year at 8.80%.
• TBLR (6 month): Remains at 5.50%.
• Repo Linked Rates: UCO Float stays at 8.05% and UCO Prime remains at 5.25%.
• Base Rate: Continues at 9.60%.
• BPLR: Remains at 14.25%.

What the Numbers Show

The divergence between TBLR and G-Sec linked rates suggests a nuanced shift in the bank’s funding cost perception across different tenors and security types. While the reduction in 3-month and 12-month TBLR indicates lower costs associated with short-term treasury bills, the increase in G-Sec linked rates implies higher yields on government securities. This split may lead to varied refinancing outcomes for borrowers depending on their specific loan linkage, with TBLR-linked loans becoming slightly cheaper while G-Sec-linked loans face marginally higher costs.

UCO Bank reported a net profit of ₹656 crore for the quarter ended June 30, 2026 (Q1FY27), an 8% decline year-on-year, primarily due to a one-time Deferred Tax Asset (DTA) charge of ₹1,237 crore arising from the transition to the new tax regime. Despite the bottom-line impact, the bank’s operating profit surged 79.8% to ₹2,810 crore, supported by robust credit growth of 21.18% and a recovery of ₹1,018 crore from Technical Written Off (TWO) accounts. The bank maintained its asset quality with Gross NPA reducing by 55 basis points to 2.08%.

The significant dip in net profit was driven by regulatory compliance with the new tax regime, which lowered the corporate tax rate from approximately 35% to 25%. This necessitated a remeasurement of DTAs, resulting in the ₹1,237 crore non-recurring charge. Excluding this impact, the regular tax provision stood at ₹625 crore. Management highlighted that core profitability remains strong, with Net Interest Income (NII) growing by 16.85% and fee-based income rising by 35%. The cost-to-income ratio improved dramatically to 37.49% from 54.06% in the previous year, though management cautioned that this figure is inflated by the non-recurring TWO recovery and expects it to normalize below 50% for the full year.

Business Growth and Asset Quality

UCO Bank’s total business reached ₹6,05,000 crore as of June 30, 2026, reflecting a 15.53% year-on-year expansion. Advances grew by 21.18% to ₹2,72,768 crore, outpacing the bank’s initial guidance of 12-14%. The Retail, Agriculture, and MSME (RAM) segment contributed significantly, with RAM advances constituting 64.5% of the total book. Within RAM, retail loans grew by 27.32%, agriculture advances by 30%, and MSME loans by 18.79%. Deposits grew by 11.28% to ₹3,32,315 crore, aided by a CASA ratio of 36.94%, which remained within the guided range.

Asset quality metrics showed consistent improvement. Gross NPA declined by 55 basis points year-on-year to 2.08%, while Net NPA reduced by 20 basis points to 0.25%. The Provision Coverage Ratio (PCR) stood at 97.85%. Slippages were contained at an annualized rate of 0.63%, well below the 1% guidance. The Standardized Monitoring Approach (SMA) book of ₹1,009 crore represented just 0.36% of total advances, down from 0.43% in March 2026.

Strategic Initiatives and Forward Outlook

Management emphasized digital transformation through "Project Parivartan 2.0," aiming to convert the call center into a profit center. The bank launched several new products, including UCO Rising Star for children, UCO Gig Scheme for gig workers, and a 3-in-1 investment product in collaboration with Aditya Birla Money. Digital business balance sheet grew to ₹35,000 crore from ₹25,000 crore in March 2026, with 70% of fixed deposits now being made via digital channels.

Looking ahead, UCO Bank expects its Net Interest Margin (NIM) to remain above the guided range of 2.8-2.9%, currently standing at 3.05% due to lower cost of funds at 4.36%. Return on Assets (ROA) is projected to approach 1% by year-end, up from 0.68% annualized in Q1, as the one-time DTA charge is cleared and credit costs remain controlled at 0.39% against a guidance of below 0.75%. The bank also plans to open a branch in GIFT City next month and has sanctioned ₹2,150 crore under the Emergency Credit Line Guarantee Scheme (ECLGS), with ₹1,700 crore disbursed so far.