Last Updated:
Indian Overseas Bank will cut the Marginal Cost of Fund-Based Lending Rate (MCLR) by 10 basis points from August 15, 2025, following a similar cut in July.
India Overseas Bank cuts MCLR rate by 10 bps.
Indian Overseas Bank has announced to cut the Marginal Cost of Fund-Based Lending Rate (MCLR) by 10 basis points, effective from August 15, 2025.
The Asset Liability Management Committee (ALCO) of Indian Overseas Bank, in its meeting on August 11, 2025, announced a 10-basis point reduction in the Marginal Cost of Funds-based Lending Rate (MCLR) across all tenors. The revised rates are effective from August 15, 2025.
The decision follows the committee’s review of the bank’s MCLR as on August 8, 2025, and marks the second consecutive cut in recent months, after a similar reduction implemented in July. The move is expected to bring relief to borrowers, as lower MCLR directly impacts interest rates on floating-rate loans such as home loans, personal loans, and certain corporate borrowings.
The bank’s MCLR cut came despite RBI in its August MPC meeting kept the repo rate unchanged at 5.55 per cent, with the ‘Neutral’ stance.
Under the new structure, the overnight MCLR has been reduced from 8.15% to 8.05%, while the one-month rate will stand at 8.30% compared to 8.40% earlier. The three-month MCLR will come down to 8.45% from 8.55%, and the six-month rate will be 8.70%, down from 8.80%. The one-year MCLR — often used as a benchmark for home loans — will now be 8.90%, compared to 9.00% previously.
Revised MCLR effective August 15, 2025:
Overnight: 8.05% (from 8.15%)
One Month: 8.30% (from 8.40%)
Three Month: 8.45% (from 8.55%)
Six Month: 8.70% (from 8.80%)
One Year: 8.90% (from 9.00%)
How Will It Impact Borrowers?
Suppose you have a home loan of Rs 40 lakh linked to a 1-year MCLR at the old rate of 9.00%. Your EMI for a 20-year tenure would be roughly Rs 35,990.
After the bank cuts the 1-year MCLR by 10 basis points to 8.90%, your EMI would drop to about Rs 35,823 — a saving of around Rs 167 per month, or about Rs 2,000 a year.
For personal loans (usually smaller but at higher interest rates), the cut works the same way — slightly lowering EMIs and total interest over the loan’s life.
It’s not a massive monthly relief, but over years, it adds up and makes borrowing cheaper.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
view comments
Read More
