Indian Overseas Bank (IOB) has announced a reduction in its Marginal Cost of Funds based Lending Rate (MCLR) for select tenors, effective September 15, 2025. The decision, made by the bank's Assets and Liabilities Management Committee, aims to adjust lending rates in response to market conditions.

Key Changes in MCLR

The bank has reduced the MCLR by 5 basis points (bps) for the following tenors:

Unchanged Rates

IOB has maintained the MCLR for shorter tenors at their existing levels:

Impact on Borrowers

The reduction in MCLR for longer tenors could potentially lead to lower interest rates for borrowers with loans linked to these benchmarks. This move may particularly benefit those with long-term loans, such as home loans or long-tenure business loans.

Market Context

The decision to reduce MCLR comes after a review of the bank's MCLR workings as of September 10, 2025. This adjustment in lending rates may reflect the bank's response to broader economic factors and competitive pressures in the banking sector.

Official Announcement

The bank officially communicated this change through a regulatory filing to the stock exchanges. Ram Mohan K, the Compliance Officer of Indian Overseas Bank, signed the intimation under Regulation 30 of SEBI (LODR) Regulations, 2015.

Conclusion

As banks continue to adjust their lending rates in response to market dynamics, borrowers and investors will be watching closely to see how these changes impact the overall lending landscape and economic conditions in India.

Indian Overseas Bank (IOB) has announced a reduction in its Marginal Cost of Funds Based Lending Rate (MCLR) by 10 basis points across all tenures, effective August 15. This decision, approved by the bank's Asset Liability Management Committee on August 11, marks the second consecutive MCLR reduction within a month, following a previous revision on July 15.

Revised MCLR Rates

The new MCLR rates for Indian Overseas Bank are as follows:

Note: Rates for other tenures fall between these two ranges.

Impact on Borrowers

This rate cut is expected to have a positive impact on both existing and new borrowers:

• Existing Borrowers: Customers with MCLR-linked loans will benefit from reduced Equated Monthly Installments (EMIs) after their next reset date.
• New Customers: Prospective borrowers will be able to avail loans at the lower rates immediately.

Market Implications

The reduction in MCLR is anticipated to stimulate demand for retail loans, particularly in segments such as housing and personal loans. This move by Indian Overseas Bank could potentially lead to increased competition in the lending market, as other banks may feel pressure to adjust their rates to remain competitive.

Conclusion

Indian Overseas Bank's decision to reduce its MCLR for the second time in a month reflects the dynamic nature of the current lending environment. As banks continue to adjust their rates, borrowers may find more favorable terms for loans, potentially stimulating economic activity in various sectors.