Indian overseas bank: Indian Overseas Bank (IOB) has given relief to its customers. The bank has cut 10 basis points i.e. 0.10% in the Marginal Cost of Fund-based lending rate (MCLR) on all periods. These new rates have come into force from 15 August 2025. This is the second consecutive month when the bank has cut MCLR. Earlier in July, there was a similar reduction. The bank will reduce the home loan EMI. The interest rate of home loan will also be reduced.
MCLR Decision Decision
The decision was taken by the Bank’s Asset Liberation Management Committee (ALCO) in a meeting held on 11 August 2025. The step was taken after a review of MCLR on 8 August 2025. The special thing is that this deduction has occurred at a time when RBI kept the repo rate stable at 5.55% in August monetary policy meeting and maintained the monetary stance neutral.
These are new MCLR rates
Overnight: 8.05% (first 8.15%)
1 month: 8.30% (first 8.40%)
3 months: 8.45% (first 8.55%)
6 months: 8.70% (first 8.80%)
1 year: 8.90% (earlier 9.00%) – This rate is benchmark for most home loans.
Impact on customers
This deduction will directly benefit the customers whose loans are at floating rate. It consists of home loan, personal loan and some corporate loans. For example, if you have a 20 -year home loan of Rs 40 lakh and it is connected to 1 year MCLR 9.00%, then your EMI is about 35,990. EMI will be reduced to about Rs 35,823 after the new 8.90% rate. That is, there will be a savings of Rs 167 per month or about 2,000 per annum. However, this monthly saving is not very large, but in a long time it reduces interest load. EMI will get some relief even on small but expensive loans like personal loans.