Indian Overseas Bank to lift MCLR rates across six tenors from October 15

what happened

Indian Overseas Bank will increase its Marginal Cost of Funds-based Lending Rate, or MCLR, by 5 basis points for six tenors from October 15, 2026. The overnight rate will move to 7.95% from 7.90%, the three-month rate to 8.50% from 8.45%, and the six-month rate to 8.75% from 8.70%. The one-month benchmark will stay at 8.25%.

The one-year and two-year rates will each rise to 8.90% from 8.85%, while the three-year rate will reach 8.95% from 8.90%. The bank said the revised levels will remain in force until another review. MCLR serves as a reference for pricing some loans, so borrowers whose facilities are linked to the benchmark may face higher costs depending on their loan conditions and reset dates.

Indian Overseas Bank released its June-quarter results on July 20. Net interest income, which reflects core lending revenue, climbed 34% year on year to ₹3,688 crore from ₹2,747 crore, while net profit advanced 49% to ₹1,659 crore from ₹1,111 crore. Gross non-performing assets improved to 1.33% from 1.42% in March, and net NPAs fell to 0.18% from 0.21%. Provisions declined to ₹834 crore from ₹1,006 crore. The government-owned lender's shares gained 3.50% after the results and ended October 12 down 1.05%, or ₹0.32, at ₹30.26 apiece.

why it matters

The rate adjustment changes a key reference point for some of the bank’s loans and may affect customers when their facilities reset. Earlier quarterly figures showed stronger earnings, lower provisions and improved asset quality.

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