Indian Overseas Bank to offer repo linked rate for new loans

Chennai-based public sector bank Indian Overseas Bank has decided to offer Repo Linked Lending Rate (RLLR) for the new loans sanctioned under retail segment (housing, Vehicle, Education and Clean loans) and micro & small enterprises. The decision came after RBI on September 4 advised banks to link all new floating rates for personal or retail loans (housing, auto, etc.,) and Micro and Small Enterprises extended by them. They can link with repo rate, 3M or 6M T-bills yields or any other benchmark published by Financial Benchmarks Private Limited, the apex bank advised.

 Out of the above three benchmarks, IOB now decided to link interest rates with repo rate for the above segment loans and the details of rates will be published on October 1. Henceforth, all the new loans under these categories will be offered with RLLR only, the bank said in a statement.

The bank has very deep exposure in rural areas and in micro and small enterprises. It offers loans of various tenures. Now, its loans to the retail and MSME sectors will be linked to the benchmarks suggested by the RBI. This will cost customers lower interest payments. If these benchmark rates go down the borrowers will have to shell out less and when go up they have to pay more. The customers may visit the bank's website for rate details.

IOB offers housing loans up to 30 lakhs at 8.5 percent interest, while for loans amounting to Rs 30 to Rs 75 lakhs, the rate is 8.6 percent. Above Rs 75 lakhs, the rate of interest is 8.75 lakhs. The customers may visit the bank's website for latest rate updates.