UCO Bank Home Loan Interest Rates

The seed of the formation of a genuinely Indian bank was sown during the historic Quit India Movement in 1942. The noted industrialist G D Birla conceived the idea of opening a bank to cater to the clientele of free India. United Commercial Bank was thus established on January 6, 1943, with its Head Office at Kolkata. The bank was unique in the sense that all its employees and directors were Indians. The bank has maintained the tradition even today in all its 3000+ service units in India and overseas centres like Singapore and Hong Kong.

United Commercial Bank was nationalised with 13 other banks in July 1969. The year 1985 proved to be a turning point in the history of United Commercial Bank, as it changed its name to UCO Bank through an Act passed in the Parliament. Though UCO Bank has branches spread all over the country, it remains an East-dominated bank. This reason prompted the Government not to include UCO Bank in the recent bank merger list. It retains its Eastern flavour, thereby continuing to function as UCO Bank.

You can also apply for a Rs. 35 Lakh Home Loan EMI

UCO Bank offers a bouquet of deposit and loan products while catering to every sector of Indian society. Its Personal Banking module takes care of the retail business that includes Home Loans as one of the most popular products. The bank offers Corporate Banking services and MSME/Business banking to cater to the business segments. Similarly, the bank has a Rural Banking section to provide banking services to the agricultural sector. It serves the international community, as well through its representative offices in Singapore and Hong Kong.

Housing and shelter are prime necessities in life. UCO Bank realises this fact as it offers a variety of Home Loan products to suit the requirements of every individual. UCO Bank has Home Loan products to finance new houses and flats. The bank grants loans for purchasing second-hand dwellings, as well. The bank has exclusive loan products for constructing houses. It also provides financial assistance for home improvement, repairs/renovations, and extensions. Balance transfer facility is also available. UCO Bank has a dominant presence in the Eastern part of our country. Hence, it uses its tremendous reach in these areas to popularise PMAY and help the Government of India realise its vision of ensuring a home for every Indian by 2022.

The USP of UCO Bank Home Loans is its competitive pricing of Home Loans with attractive rates of interest. The bank ensures that its clientele reaps the real benefits of market rates by linking its Home Loan rates to market-related rates. This factor plays a vital role in realising the bank's endeavour to serve its customers better.

Repo Rate Linked Lending Rates - RLLR

UCO Bank strictly follows the directives of the Reserve Bank of India (RBI) by linking its retail advances to an external benchmark rate like the Repo Rate. UCO Bank has launched a new Home Loan product, where it offers RLLR-linked interest rates to its new customers. Existing customers will also get an option to switch over to the RLLR concept in due course. The bank has gone a step ahead by linking its High-Value savings deposits with the repo rate.

The repo rate is an accurate indication of the market rate. This rate provides the direction for other market-linked rates to follow. RBI has recently brought down the repo rate from 5.75% to 6% and urged all banks to link their interest rates to this external benchmark. It ensures that the benefit of market rate fluctuations reaches the ultimate customer.

The formula for calculating RLLR is easy. It comprises three factors:

• The repo rates announced by the RBI from time to time
• The average net interest margin of the bank for the last ten years
• The credit history or credit rating of the borrower

Thus, the RLLR concept is better than the existing MCLR because it connects with the market-linked rates and the overall performance of the bank. UCO Bank has adapted to RLLR with effect from September 01, 2019.

Marginal Cost of Funds-based Lending Rate - MCLR

With effect from April 01, 2016, all banks in India follow the MCLR concept while deciding on the rate of interest on their advances. UCO Bank follows the same methodology. The MCLR indirectly connects with the market rate.

The aspects that go into deciding the MCLR of the bank are as follows:

• Marginal Cost of Funds: The marginal cost of funds is a vital aspect. It comprises two factors, the marginal cost of borrowing (92%) and the return on net worth (8%). Hence, it is a complex calculation that involves the bank to perform well and have a healthy capital structure, as well.
• Tenor Premium: This factor is common to all loans, as it is not borrower or loan-specific.
• Operating Cost: It includes all the costs that banks incur for mobilising the funds required to lend. However, it excludes those costs that are recoverable from the customer like processing fees.
• Negative carry on account of CRR: This factor comes into play when the returns on CRR are less than the cost of funds for the bank.

The MCLR concept is a market rate-linked concept, but the benefits of rate fluctuations reach the customer late. It prompted RBI to intervene and direct banks to adopt a straightforward external benchmark rate to pass on the benefits to the customer. The RLLR concept is a result of such a directive. All banks must switch to the RLLR concept by October 01, 2019.

Base Rate

Before April 2016, banks followed the Base Rate concept. This concept was also a market rate-linked concept in many ways. The Base Rate concept was in force from July 01, 2010.

Benchmark Prime Lending Rate - BPLR

Before the introduction of the Base Rate concept, banks had a BPLR structure in place. Even today, banks have some loans in the BPLR structure. Therefore, every bank, including UCO Bank announces its BPLR and BR at protracted intervals.

• UCO Bank Home Loan interest rates are linked to the one-year MCLR of the bank. It is a floating rate of interest. Any increase or decrease in this rate will affect the home loan interest rate.
• The RLLR Home Loan interest rate is available for new customers. However, the bank will allow existing customers to switch over to the RLLR in due course.
• Customers who are under the BR and BPLR regime will continue to remain there unless they request the bank to switch over to MCLR or RLLR. The reverse switching is not possible.
• The RLLR depends on the CIBIL rating of the customer
• RLLR is also a floating rate, depending on the repo rates announced by the RBI
• The rates of interest applicable to PMAY borrowers are the same as those of general borrowers

Like all other banks, UCO Bank calculates Home Loan interest on daily reducing balances. Hence, EMI is the ideal option for repayment.

UCO Bank does not have an EMI calculation chart on its web page. Hence, customers can access the Home Loan EMI Calculator available on MyMoneyMantra to determine their EMI.

• Access the MyMoneyMantra website and select the Financial Tools option
• Choose the EMI Calculator
• Enter the necessary data, such as the loan amount, the rate of interest, and the Home Loan repayment tenure.
• The EMI is available instantly, along with the break-up of principal and interest repayment throughout the loan tenure.

PMAY loans need a different approach to calculate the EMI because of the upfront subsidy factor. Each PMAY beneficiary is eligible for a subsidy/grant from the Government of India. The subsidy amount depends on the category to which the borrower belongs and the loan amount.

• Determine the subsidy amount using the PMAY subsidy calculator available on the PMAY website.
• Deduct the available subsidy from the principal loan amount because of the upfront credit facility available in PMAY accounts.
• Use the reduced principal amount as the base for calculating the EMI