🏦 Indian Overseas Bank Slashes MCLR by 10 bps Across All Tenors from July 15

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Chennai: In a borrower-friendly move, Indian Overseas Bank (IOB) has announced a 10 basis points (bps) reduction in its Marginal Cost of Funds-Based Lending Rate (MCLR) across all tenors, effective July 15, 2025. The decision was taken at the Asset Liability Management Committee (ALCO) meeting held on July 14.

This marks a continuation of the bank’s ongoing efforts to make credit more affordable. Notably, IOB had already reduced its Repo Linked Lending Rate (RLLR) by 50 bps — from 8.85% to 8.35%, effective June 12, 2025.

🔢 Revised MCLR Rates

Tenor	Existing MCLR (From Jan 15, 2025)	Revised MCLR (From July 15, 2025)
Overnight	8.25%	8.15%
One Month	8.50%	8.40%
Three Months	8.65%	8.55%
Six Months	8.90%	8.80%
One Year	9.10%	9.00%

💡 Impact on Borrowers

The reduction in MCLR is set to lower interest rates for loans that are directly linked to it — including home loans, auto loans, and personal loans. Borrowers with existing MCLR-linked loans will benefit from lower EMIs, subject to the reset frequency specified in their loan contracts, which is often annual.

This move is particularly significant as borrowing costs have remained elevated over the past year. With both MCLR and RLLR reduced in a span of one month, IOB is signaling its intent to support credit growth and ease repayment burdens for retail and MSME borrowers.

🧾 Expert View

Banking analysts view this development as a positive step toward better rate transmission, helping borrowers access cheaper credit as liquidity improves and monetary tightening slows. The dual cuts in RLLR and MCLR also indicate that banks may be aligning more closely with prevailing policy cues from the RBI.

📌 What Should Borrowers Do?

Existing MCLR-linked borrowers should check their reset dates to determine when the lower rates will be applied to their loan.
New borrowers can expect slightly cheaper loan options starting immediately.
Borrowers can also explore switching options between MCLR and RLLR-linked products depending on suitability and interest differential.

🔚 Conclusion

IOB’s rate reduction adds to the growing momentum among banks to pass on cost efficiencies to customers. With inflation stabilizing and funding costs moderating, further rate revisions across the industry may follow — potentially easing the overall interest rate environment in the coming months.

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