Indian Overseas Bank Cuts Overnight MCLR To 7.95% Effective January 15

Indian Overseas Bank (IOB) has announced a reduction in its overnight marginal cost of funds-based lending rate (MCLR) by 5 basis points to 7.95%. The revised rate will take effect from January 15, 2026, following a review by the bank’s Asset Liability Management Committee (ALCO).

The decision was taken during a meeting on January 13 after evaluating MCLR calculations as of January 10. All other MCLR tenors remain unchanged under the latest revision.

Current MCLR Structure Across Tenors

The one-month MCLR continues at 8.30%, while the three-month rate stands at 8.40%. The six-month MCLR remains at 8.65%, and the one-year rate is unchanged at 8.80%.

Similarly, the two-year MCLR stays at 8.80%, and the three-year MCLR holds steady at 8.85%. These rates will remain in force until further review by the bank.

Impact On Borrowers and Loan Costs

For borrowers, the change in overnight MCLR will have a limited impact on overall loan costs. Most retail and corporate loans linked to longer tenors such as one-year or three-year MCLR will continue at existing rates.

New borrowers can expect interest rates ranging between 8.30% and 8.85%, depending on loan tenure. The revision primarily affects short-term lending linked to overnight benchmarks.

Regulatory Filing and Compliance

IOB communicated the rate change through a regulatory filing, ensuring transparency and compliance with disclosure norms. The bank confirmed that the revised overnight MCLR will apply from January 15 until further notice.

All other terms and conditions related to lending rates remain unchanged. The update provides clarity for customers and stakeholders regarding the bank’s lending structure.

Recent Developments In IOB

Last month, the government initiated an Offer for Sale (OFS) to reduce its stake in Indian Overseas Bank. The plan included selling up to 2% of the lender’s outstanding equity, with a greenshoe option for an additional 1%.

The OFS reflects ongoing efforts to optimise public sector bank holdings. These developments come alongside IOB’s periodic review of lending rates to align with market conditions.

Read More: Bank Unions Call Nationwide Strike on January 27 Over 5-Day Week Demand.

Conclusion

Indian Overseas Bank’s decision to cut its overnight MCLR to 7.95% marks a minor adjustment in its lending framework. Longer-tenor rates remain unchanged, keeping most loan costs stable for existing customers.

The revision aligns with the bank’s routine review process and regulatory compliance requirements. Stakeholders are advised to monitor future updates for any changes in lending rates.

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