Indian Overseas Bank has announced a reduction in its overnight Marginal Cost of Funds based Lending Rate (MCLR) by 5 basis points, bringing it down to 7.95% effective from January 15, 2026. The decision reflects the bank's ongoing efforts to optimize its lending rates in response to current market conditions.

ALCO Decision and Implementation

The bank's Asset Liability Committee (ALCO) made this decision during its meeting held on January 13, 2026, after reviewing the MCLR workings as on January 10, 2026. The revised rates will remain effective until the next review cycle, providing clarity to borrowers and the market about the bank's lending rate structure.

Revised MCLR Structure

The comprehensive revision shows a targeted approach to rate adjustment, with changes limited to the shortest tenor while maintaining stability across other periods:

Rate Structure Analysis

The selective reduction demonstrates the bank's strategic approach to interest rate management. While the overnight MCLR has been reduced by 5 basis points from 8.00% to 7.95%, all other tenor rates across different periods remain unchanged. The rate structure shows an upward curve from overnight to longer tenors, with rates ranging from the revised 7.95% for overnight lending to 8.85% for three-year MCLR.

Market Impact and Borrower Benefits

The reduction in overnight MCLR is expected to provide relief to borrowers whose loan rates are linked to this benchmark. This adjustment comes at a time when banks are carefully balancing their cost of funds with competitive lending rates. The unchanged rates for other tenors suggest a measured approach to rate revision, maintaining stability for medium to long-term lending products.

Regulatory Compliance

The announcement was made under Regulation 30 of SEBI (LODR) Regulations, 2015, ensuring transparency and timely disclosure to stakeholders. The bank has communicated the changes to both BSE and NSE, where it trades under scrip codes 532388 and IOB respectively, maintaining compliance with listing requirements and keeping investors informed about significant operational decisions.

Indian Overseas Bank has announced its decision to maintain the one-year Marginal Cost of Funds based Lending Rate (MCLR) at 8.80%. This rate decision indicates the public sector bank's current stance on lending rate pricing amid prevailing market conditions.

MCLR Rate Decision

The bank's decision to keep the one-year MCLR unchanged reflects its assessment of various factors including funding costs, operational expenses, and market dynamics. The MCLR framework, introduced by the Reserve Bank of India, serves as the internal benchmark for banks to determine lending rates for various loan products.

Impact on Borrowers

The unchanged MCLR rate means that existing borrowers with loans linked to the one-year MCLR will continue to pay interest based on the current benchmark. New borrowers seeking loans tied to this benchmark will also be offered rates calculated using the 8.80% MCLR as the base rate.

This rate stability provides predictability for both the bank and its customers in terms of loan pricing. The MCLR serves as a key reference point for various lending products including home loans, personal loans, and business loans, making this decision significant for the bank's overall lending portfolio.