Indian Overseas Bank Cuts Lending Rates by 5 bps Across Select Tenures

Indian Overseas Bank has announced a reduction in its Marginal Cost of Funds-Based Lending Rates (MCLR) by 5 basis points across select tenures. The revised rates will come into effect from September 15, 2025, offering potential relief for borrowers with floating-rate loans.

MCLR Reduced on Overnight, 1-Year and Longer Tenures

On September 11, 2025, Indian Overseas Bank confirmed the 5 basis point cut in MCLR applicable to overnight, 1-year, 2-year and 3-year loans. Post-revision, the 1-year MCLR, which serves as a crucial benchmark for home and personal loans, now stands at 8.85%, compared to 8.90% earlier. Similarly, the overnight MCLR has been reduced to 8.00%, the 2-year MCLR to 8.85% and the 3-year MCLR to 8.90%.

The revised cut enables borrowers with floating interest rate loans linked to these tenures to potentially benefit through lowered monthly EMIs beginning from the effective date.

Unchanged Rates on Short-Term Tenures

Not all tenures were revised. Indian Overseas Bank opted to maintain its 1-month, 3-month and 6-month MCLR rates. These continue to remain at 8.30%, 8.45% and 8.70%, respectively. Customers borrowing for shorter durations will not see a change in rates for now under the current revision.

Read More: HDFC Bank Slashes MCLR, Offering Relief to Borrowers!

What MCLR Means for Borrowers

MCLR is the minimum interest rate a bank can offer on loans, barring certain exceptions permitted by the Reserve Bank of India. It reflects the bank’s marginal cost of borrowing and is periodically reviewed. Changes in MCLR directly influence floating rate loan products, such as housing, personal and car loans.

Indian Overseas Bank Share Price Performance

On September 12, 2025, Indian Overseas Bank share price opened at ₹39.62 on NSE, above the previous close of ₹39.44. During the day, it surged to ₹39.80 and dipped to ₹39.32. The stock is trading at ₹39.39 as of 1:46 PM. The stock registered a marginal change of -0.13%.

Over the past week, it has moved up by 0.79%, over the past month, it has moved up by 8.90%, and over the past 3 months, it has moved up by 2.21%.

Conclusion

The latest downward revision in Indian Overseas Bank’s MCLR for key loan tenures is expected to ease borrowing costs for eligible customers. While short-term lending rates remain unchanged, the cut on longer tenure loans enhances affordability, especially for those with floating-rate home or personal loans.

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