Borrow Cheaper Now! Indian Overseas Bank Cuts MCLR by 10 Basis Points Across Tenures

Indian Overseas Bank (IOB) has announced a reduction of 10 basis points in its Marginal Cost of Funds Based Lending Rate (MCLR) across all loan tenures, effective July 15, 2025. The move is designed to make borrowing more affordable for its retail and corporate customers at a time when competition among banks to offer cheaper credit is intensifying.

The decision was taken by the bank’s Asset Liability Management Committee (ALCO) in its meeting on July 14. This latest reduction comes close on the heels of the bank’s earlier move to cut its Repo Linked Lending Rate (RLLR) by 50 basis points—from 8.85% to 8.35%—effective June 12.

Revised MCLR Rates Effective July 15

Under the new structure, the overnight MCLR has been cut from 8.25% to 8.15%. The one-month MCLR drops to 8.40% from 8.50%, while the three-month MCLR is revised to 8.55% from 8.65%. The six-month MCLR now stands at 8.80% instead of 8.90%. The crucial one-year MCLR—widely used as a benchmark for consumer and corporate loans—has been brought down from 9.10% to 9.00%.

The bank’s move is expected to reduce borrowing costs for new loans and existing loans with floating rates tied to MCLR, offering relief to customers in an otherwise challenging interest-rate environment. It also signals the bank’s intent to stay competitive amid broader market trends toward easing credit costs.
 

Indian banks have been adjusting lending rates in response to macroeconomic conditions, funding costs, and central bank policy moves. The Reserve Bank of India has maintained a tight policy stance to control inflation, but banks are finding room to pass on lower marginal funding costs.

Notably, Indian Overseas Bank’s latest MCLR cut follows its earlier decision in early July to reduce its one-year MCLR by 5 basis points to 9.00%, effective July 3. These moves align with the bank’s strategy to encourage loan growth and support its customers with more affordable credit options.

Competitive Pressure in the Banking Sector
The move also comes as public sector and private sector banks compete aggressively for market share in retail and SME lending. Lower MCLR and RLLR rates improve the bank’s ability to attract price-sensitive borrowers and support India’s credit-driven economic expansion.

Also Read: Anil Agarwal’s Message on India’s Youth Power