UCO Bank revises lending rates based on marginal cost

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26 Aug, 2025 12:21

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Public sector lender UCO Bank has revised lending rates based on marginal cost of funds with effect from April 1.

For one year loan, the interest rate will be 9.55 percent while for two years it is going to be 9.65 percent, UCO Bank said in a BSE filing.

The rate of interest will be 9.40 percent for loan of one month duration, 9.45 percent for loans for three month and 9.50 percent for six months.

RBI had asked banks to price fixed rate loans of up to three years based on marginal cost of funds from April 1.

The lending rate based on marginal cost of funds is lower than base rate in some cases resulting in lower EMIs for borrowers. Most of the banks were deciding lending rates based on their average cost of funds.

A number of banks, including SBI, ICICI, HDFC Bank, Axis Bank, Bank of India have shifted to lending rates based on marginal cost of funds.

Other banks that have adopted new methodology for calculating lending rates include Kotak Mahindra Bank, Yes Bank, IDBI Bank and Oriental Bank of Commerce.