Indian Overseas Bank shares in focus after overnight MCLR cut by 5 bps

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Shares of Indian Overseas Bank are likely to be in focus on Wednesday after the state-owned lender trimmed its overnight lending rate, a move that comes amid an ongoing government stake sale and renewed attention on public-sector banks as investors weigh rate signals, balance-sheet discipline and policy actions.

Indian Overseas Bank said its Asset Liability Management Committee, at a meeting held on January 13, reviewed the marginal cost of funds-based lending rate as on January 10 and approved a reduction of 5 basis points in the overnight MCLR, effective January 15. The decision was disclosed in a regulatory filing to stock exchanges.


Overnight MCLR lowered


Consequently, the overnight MCLR will stand at 7.95% from Thursday, compared with the existing 8%. The bank said the decision followed a review of the MCLR workings at the ALCO meeting. There is no change in other MCLR tenors.One basis point equals 0.01%. Indian Overseas Bank had last revised its MCLR in December.

Limited impact on existing borrowers


The rate revision is expected to have a limited impact on existing borrowers, as most loans are linked to longer-term MCLR tenors that remain unchanged. New borrowers can expect interest rates in the range of 8.30% to 8.85%, depending on the loan tenure selected. The lender said the revised rates will remain in force until further review.

Government stake sale underway


In a separate development, the government has launched an Offer For Sale to pare its holding in the lender. The OFS includes the sale of up to 2% of Indian Overseas Bank’s outstanding equity, with a greenshoe option to sell an additional 1%.

Stock performance


Indian Overseas Bank shares closed at Rs 35.48 on Tuesday, up 0.54% from the day’s opening price on the NSE. The announcement on the MCLR adjustment was made after market hours through a regulatory filing.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

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