Indian Overseas Bank- MCLR Rates Hiked By 05 bps From 10 January 2023

Indian Overseas Bank (IOB) raised the Marginal Cost of Fund Based Lending Rate (MCLR) by 5 basis points across tenures on Monday. The IOB has raised the marginal cost of funding-based lending rate (MCLR) for all tenors. The new MCLR rates became effective on January 10, 2023.

What is the MCLR rate?

The MCLR (Marginal Cost of Funds Based Landing Rate) is the interest rate at which banks will not lend unless certain conditions are met. Previously, when banks and financial institutions lent at base rates, their prime customers benefited unfairly.

The following Indian Overseas Bank Marginal Cost of Funds-Based Lending Rates (MCLR) are effective:

Tenor	Existing rate	Changes	Revised rate
Overnight MCLR	7.65	0.05	7.7
One Month MCLR	7.7	0.05	7.75
Three Month MCLR	8	0.05	8.05
Six Month MCLR	8.15	0.05	8.2
One Year MCLR	8.25	0.05	8.3
Two Year MCLR	8.35	0.05	8.4
Three Year MCLR	8.4	0.05	8.45

According to IOB, loan interest rates for overnight tenor MCLR and one month MCLR shall be sanctioned only by top management at the central office. It also stated that the discretion to sanction overnight and one-month MCLR is not available to any other functionaries.

After the Reserve Bank of India raised its benchmark lending rates on December 7, several banks and lenders revised their lending rates. On December 7, the RBI Monetary Policy Committee, led by Governor Shaktikanta Das, raised the repo rate by 35 basis points to 6.25 percent. The repo rate is the interest rate at which the Reserve Bank of India lends funds to commercial banks when they are needed. It is a tool used by the central bank to keep inflation under control. This is the third increase since the start of the current fiscal year, bringing the rate back to pre-pandemic levels in order to combat inflationary pressures.