Indian Overseas Bank Cuts Lending Rate by 50 bps

11 Jun 2025 , 07:38 PM

Indian Overseas Bank has announced it’s trimming its lending rate by 50 basis points, just a day after the RBI lowered the repo rate to 5.50% in its latest policy review. Starting June 12, the bank’s repo linked lending rate (RLLR) will be down from 8.85% to 8.35%.

This rate cut isn’t just following the central bank’s lead; it’s also a move likely aimed at improving credit demand in the months ahead. Meanwhile, the bank ended the March quarter on a strong note. Its net profit came in at ₹1,051 crore, which is a 30% rise compared to the same period last year. The bank’s net interest income also grew, climbing 13% year-on-year to reach ₹3,123 crore.

In Q4, the bank set aside ₹200 crore for bad loans that’s down by half from the ₹400 crore it provisioned in the December quarter. Gross NPAs came down to 2.14%, compared to 2.55% last quarter. Net NPA fell slightly to 0.37%. Even the return on assets nudged higher, touching 1.12% versus 0.94% in the same quarter last year.

The board has also cleared plans to raise up to ₹4,000 crore in equity capital. This could be through any of the usual routes FPO, rights issue, QIP, or even preferential allotment depending on shareholder approval in the upcoming AGM or EGM.

The bank’s looking to raise another ₹1,000 crore through Tier-II bonds under Basel-III norms, possibly with a greenshoe option, depending on funding needs for the year.

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