Bank of Maharashtra , a prominent public sector bank, has announced revisions to its Marginal Cost of Funds Based Lending Rate (MCLR) effective October 31, 2025. The bank has implemented rate reductions across several tenors, which may impact borrowing costs for customers.

Key Rate Changes

The bank has made the following adjustments to its MCLR:

Impact of Rate Changes

The most significant reduction is observed in the overnight rate, which has decreased by 25 basis points from 8.20% to 7.95%. This change could potentially benefit short-term borrowers and impact the interbank lending market.

The one-month and three-month rates have also seen reductions of 10 basis points each, moving to 8.30% and 8.45% respectively. These adjustments may affect short-term loans and working capital financing.

It's noteworthy that the six-month and one-year MCLR rates remain unchanged at 8.70% and 8.85% respectively, indicating stability in medium-term lending rates.

Official Communication

The rate revision was officially communicated to both the BSE and NSE stock exchanges by Vishal Sethia, the Company Secretary and Compliance Officer of Bank of Maharashtra. This disclosure aligns with the bank's obligations under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Implications for Borrowers

While the reduction in short-term rates may lead to lower borrowing costs for some customers, the impact on long-term loans linked to the one-year MCLR remains neutral. Existing borrowers with loans tied to the reduced tenors may see some relief in their interest obligations, subject to the reset dates of their loans.

Potential borrowers considering short-term loans might find this an opportune time to approach Bank of Maharashtra, given the reduced rates for shorter tenors. However, as always, it's advisable for consumers to compare rates across multiple lenders and consider all aspects of loan terms before making financial decisions.

The bank's decision to adjust its MCLR comes amidst a dynamic financial landscape, and borrowers should stay informed about how these changes might affect their financial planning and loan obligations.

Bank of Maharashtra (BoM) is setting its sights on robust credit growth exceeding 20%, driven by a strategic focus on digital lending initiatives and strong momentum in key sectors. The bank's growth strategy, as outlined in its recent investor presentation, emphasizes core retail, agriculture, and MSME (RAM) segments while leveraging technological advancements.

Digital Transformation Fueling Growth

BoM is making significant strides in its digital transformation journey, which is expected to be a key driver of its ambitious growth targets. The bank reported that 98.84% of its transactions are now conducted through digital channels, highlighting the success of its digitalization efforts.

Key Digital Initiatives

1. UPI/BHIM Adoption: The bank has seen a substantial increase in UPI/BHIM users, reaching 6.12 million as of September 2025, up from 3.11 million in September 2024.

2. WhatsApp Banking: BoM's WhatsApp banking service has gained traction, with user base growing to 2.03 million by September 2025.

3. QR Merchant Onboarding: The bank has successfully onboarded 0.95 million merchants for QR-based transactions.

4. Mobile Banking: Mobile banking users have increased to 2.30 million as of September 2025.

Focus on RAM Segments

The bank's strategy to focus on Retail, Agriculture, and MSME (RAM) segments appears to be paying off. As of September 2025, the RAM portfolio constitutes 62.19% of BoM's domestic advances, indicating a strong presence in these key sectors.

Stable Asset Quality

Despite the aggressive growth plans, BoM is maintaining a focus on asset quality. The bank reported a Gross Non-Performing Asset (GNPA) ratio of 1.72% as of September 2025, showcasing its ability to manage credit risk effectively while pursuing growth.

Outlook

Bank of Maharashtra's strategy of combining digital innovation with a focus on core lending segments positions it well for sustained growth. The bank aims to maintain stable net interest margins and keep gross non-performing assets low. Additionally, BoM is implementing technology-led efficiency measures to improve its return on equity trajectory through FY26.

As the banking sector continues to evolve, BoM's emphasis on digital lending and its strong presence in retail, agriculture, and MSME segments could provide it with a competitive edge. However, the bank will need to navigate potential economic headwinds and maintain its asset quality to achieve its ambitious growth targets.

Investors and industry observers will be keenly watching how Bank of Maharashtra executes its strategy in the coming quarters, particularly its ability to leverage digital channels for growth while managing risks effectively.