UCO Bank , a state-owned lender, has received government approval to handle trade payments for Nayara Energy, a move that comes nearly two months after the refiner faced sanctions from the European Union (EU). This development marks a significant step in addressing the operational challenges faced by Nayara Energy since the sanctions were imposed in July.

Government Intervention

Senior executives from UCO Bank recently met with finance ministry officials, where they were instructed to take the lead in executing payments for Nayara Energy. This decision comes in response to Nayara's appeal to government officials for assistance in securing a domestic lender with limited offshore presence to support its crude oil import payments and receive payments for refined fuel exports.

Nayara Energy's Challenges

Nayara Energy, which is part-owned by Russian oil major Rosneft, has been grappling with significant operational hurdles since being sanctioned:

• Large institutions, including the State Bank of India, have ceased processing transactions for the company.
• Ships have diverted from Nayara's terminal, impacting its supply chain.
• The company has been forced to reduce its run rates and seek advance payments to maintain operations.

Ownership and Market Presence

Nayara Energy, with Rosneft owning just over 49% stake, plays a substantial role in India's refining sector:

• Accounts for nearly 8% of India's refining capacity
• Operates 7% of the country's retail-fuel network

Next Steps

While the government has given the green light for UCO Bank to facilitate trade payments, several operational details are still being ironed out:

• The choice of currency for transactions is yet to be finalized.
• The mechanism for processing crude oil import payments and receiving payments for refined fuel exports is being developed.

This move by the Indian government, channeled through UCO Bank, aims to provide a lifeline to Nayara Energy, ensuring the continuity of its operations despite the EU sanctions. The arrangement could potentially set a precedent for handling similar situations involving sanctioned entities in the future, highlighting India's pragmatic approach to balancing international relations and domestic economic interests.

UCO Bank , a prominent public sector lender, has announced revisions to its benchmark interest rates, effective September 10, 2025. The bank's Asset Liability Management Committee (ALCO) has implemented changes across various rate categories, with notable reductions in the Marginal Cost of Funds Based Lending Rate (MCLR).

MCLR Reductions

UCO Bank has lowered its MCLR across all tenors by 5 to 10 basis points:

The reduction in MCLR is likely to benefit borrowers with MCLR-linked loans, as it may lead to lower interest rates on various lending products.

Treasury Bill Linked Rate (TBLR) Changes

While the MCLR saw a decrease, the bank has made adjustments to its Treasury Bill Linked Rates:

• 3-month TBLR: Increased from 5.35% to 5.45%
• 6-month TBLR: Remains unchanged at 5.50%
• 12-month TBLR: Remains unchanged at 5.55%

G-Sec Linked Rates

UCO Bank has also updated its G-Sec linked rates:

• UCO G-Sec Rate (1 year): Increased from 5.64% to 5.67%
• 10-year G-Sec Rate YTM (Annualized Par yield): Rose from 6.51% to 6.78%

Unchanged Rates

Several benchmark rates remain unaltered:

• Repo Linked Rate – UCO Float: 8.30%
• Repo Linked Rate – UCO Prime: 5.50%
• Base Rate: 9.60%
• Benchmark Prime Lending Rate (BPLR): 14.25%

These rate adjustments reflect UCO Bank's response to current market conditions and monetary policy changes. Borrowers and depositors are advised to review how these changes might affect their financial products linked to these benchmark rates.

UCO Bank's decision to reduce MCLR rates could potentially stimulate borrowing, while the increases in certain other benchmark rates may impact specific financial instruments differently. As always, customers are encouraged to consult with bank representatives for personalized advice on how these changes may affect their individual financial situations.