Indian Overseas Bank (IOB) has announced a significant reduction in its Marginal Cost of Funds Based Lending Rate (MCLR), cutting rates by 10 basis points across all loan tenures. This move, effective from July 15, 2025, follows a previous reduction in the bank's Repo Linked Lending Rate and is expected to make borrowing more affordable for customers.

Key MCLR Revisions

The bank has provided a detailed breakdown of the MCLR changes:

Impact on Borrowers

This reduction in MCLR is likely to benefit both new and existing borrowers of Indian Overseas Bank. Loans linked to MCLR will see a decrease in interest rates, potentially leading to lower EMIs for borrowers. The move could stimulate credit growth and support various sectors of the economy.

Recent Rate Adjustments

The MCLR cut comes on the heels of another significant rate reduction by IOB. Earlier, the bank had decreased its Repo Linked Lending Rate by 50 basis points to 8.35%, effective from June 12, 2025. These consecutive rate cuts demonstrate the bank's proactive approach to aligning its lending rates with market conditions.

Official Announcement

The bank's Assets and Liabilities Management Committee reviewed the MCLR workings on July 10, 2025, and decided on this rate cut. The decision was officially communicated to the stock exchanges on July 14, 2025, in compliance with SEBI regulations.

Indian Overseas Bank's decision to reduce MCLR across all tenures reflects the ongoing trends in the banking sector and could potentially enhance the bank's competitiveness in the lending market. Borrowers are advised to review their loan agreements to understand how this change might affect their interest obligations.

Indian Overseas Bank (IOB) has received a significant boost to its capital raising plans, as shareholders have given their approval for a substantial fundraising initiative. The state-owned bank is now set to bolster its equity capital by up to Rs 4,000.00 crore, a move that could strengthen its financial position and support future growth.

Diverse Fundraising Avenues

The bank's shareholders have approved a multi-faceted approach to raise capital, which includes:

• Qualified Institutional Placements (QIPs)
• Rights issues
• Employee stock schemes

This diverse range of fundraising methods provides IOB with flexibility in its capital-raising efforts, allowing it to tap into various investor segments and optimize its capital structure.

Phased Implementation

The approved fundraising plan is scheduled to be executed in fiscal year 2026 (FY26). IOB has indicated that the capital raise will be carried out in one or more tranches, suggesting a strategic, phased approach to the process. This method allows the bank to adjust its fundraising efforts based on market conditions and its evolving capital needs.

Employee Stock Participation Scheme

In addition to the broader fundraising approval, shareholders have also given the green light to a specific equity issuance targeted at the bank's workforce. The IOB-ESPS 2025–26 scheme will allow the bank to issue equity worth up to Rs 4,000.00 crore to its permanent employees.

This employee stock participation scheme serves multiple purposes:

• Aligns employee interests with the bank's performance
• Potentially enhances employee retention and motivation
• Provides an additional avenue for capital raising

Implications for IOB

The approval of this substantial fundraising plan signals confidence in IOB's future prospects and strategy. The additional capital could be utilized for various purposes, such as:

• Strengthening the bank's balance sheet
• Supporting credit growth
• Investing in technology and infrastructure
• Meeting regulatory capital requirements

As Indian Overseas Bank moves forward with its capital raising plans, stakeholders will be keenly watching how the bank deploys these funds to drive growth and improve its market position in the competitive Indian banking sector.