Indian Overseas Bank Cuts MCLR by 10 Basis Points From August 15; Check Updated Rates
Indian Overseas Bank (IOB) has announced a 10-basis point reduction in its Marginal Cost of Fund-Based Lending Rate (MCLR), effective August 15, 2025, following a similar cut in July.
The bank’s Asset Liability Management Committee (ALCO), in a meeting on August 11, 2025, approved the 10-basis point reduction across all tenors. The revised MCLR rates will take effect from August 15, 2025.
This marks the second consecutive reduction in recent months. The move is aimed at benefiting borrowers, as lower MCLR rates directly affect floating-rate loans such as home loans, personal loans, and certain corporate loans.
The cut comes even though the Reserve Bank of India (RBI), in its August Monetary Policy Committee meeting, kept the repo rate steady at 5.55% with a neutral stance.
Updated MCLR Rates Effective August 15, 2025:
- Overnight: 8.05% (previously 8.15%)
- One Month: 8.30% (previously 8.40%)
- Three Month: 8.45% (previously 8.55%)
- Six Month: 8.70% (previously 8.80%)
- One Year: 8.90% (previously 9.00%)
Impact on Borrowers
For example, a home loan of ₹40 lakh linked to a 1-year MCLR at 9.00% would have an EMI of around ₹35,990 for a 20-year tenure. With the revised 1-year MCLR of 8.90%, the EMI would decrease to approximately ₹35,823, saving about ₹167 per month or nearly ₹2,000 annually.
For personal loans, the reduction also slightly lowers monthly EMIs and total interest, making borrowing more affordable. While the monthly savings may seem modest, over the life of a loan, it can add up significantly.
