UCO Bank

UCO Bank Reduces MCLR Across All Tenures from June 10, Loans to Become Cheaper

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UCO Bank
New Delhi – In a major development that brings relief to borrowers, UCO Bank, one of India’s leading public sector banks, has announced a cut in its Marginal Cost of Funds-Based Lending Rate (MCLR) across all tenures, effective June 10, 2025. The move follows the Reserve Bank of India’s (RBI) recent decision to slash the repo rate by 50 basis points, marking the third consecutive cut and bringing the repo rate down from 6% to 5.50%.

With this latest revision, taking loans such as home loans, car loans, and personal loans from UCO Bank is set to become more affordable. The bank’s move aligns with the RBI’s goal of passing on the benefits of policy rate changes to the end consumers.

Revised MCLR Rates from June 10

UCO Bank has reduced MCLR by 0.10% across various tenures, as detailed below:

  • Overnight MCLR: Reduced from 8.25% to 8.15%

  • 1-Month MCLR: Reduced from 8.45% to 8.35%

  • 3-Month MCLR: Reduced from 8.60% to 8.50%

  • 6-Month MCLR: Reduced from 8.90% to 8.80%

  • 1-Year MCLR: Reduced from 9.10% to 9.00%

The one-year MCLR is especially significant, as most retail loans, including home loans, are linked to it. This cut means EMIs for existing and new borrowers are likely to reduce, making credit more accessible and easing the financial burden on households.

What Is MCLR and Why It Matters

MCLR, or Marginal Cost of Funds-Based Lending Rate, is the minimum interest rate below which a bank cannot lend. Introduced by the RBI in April 2016, the MCLR mechanism was designed to bring transparency in the calculation of lending rates and ensure faster transmission of changes in RBI’s policy rates to borrowers.

MCLR is determined by several factors, including:

  • The cost of funds (interest paid on deposits and borrowings)

  • Operating expenses

  • Tenor premium (for longer-term loans)

  • The cost incurred due to maintaining the Cash Reserve Ratio (CRR)

When the RBI cuts the repo rate, the cost of borrowing funds for banks decreases. As a result, banks like UCO can reduce their MCLR, thereby making loans cheaper for consumers.

Sector-Wide Impact Expected

UCO Bank’s decision is likely to influence other public and private sector banks to follow suit. With the RBI cutting the repo rate by a total of 75 basis points over recent months, the overall direction of interest rates is downward, aimed at boosting credit growth and stimulating economic activity.

Borrowers across India can expect more competitive loan offerings in the coming weeks, especially for high-value loans such as home loans and education loans, as more banks revise their lending rates in line with MCLR adjustments.

Conclusion

UCO Bank’s move to reduce MCLR is a welcome development for borrowers, especially in an environment where affordability and access to credit are crucial for economic momentum. The reduction not only supports individual borrowers but also aligns with broader macroeconomic objectives of lowering the cost of borrowing and stimulating demand.

Borrowers are advised to review their loan agreements and consult with their banks to understand how the MCLR cut will affect their EMIs and repayment schedules.

Author Profile

Kuldeep Singh Chundawat
Kuldeep Singh Chundawat
My name is Kuldeep Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.