Mumbai: HDFC Bank has announced a reduction in its loan interest rates, offering relief to customers with home, car, or personal loans linked to the Marginal Cost of Funds Based Lending Rate (MCLR). The bank has cut MCLR by up to 10 basis points (0.10 percent), and the new rates came into effect from November 7.
The new MCLR rates now range between 8.35 percent and 8.60 percent, compared to the earlier range of 8.45 percent to 8.65 percent. This means the bank has lowered lending rates by 5 to 10 basis points across different loan tenures. In simple terms, if your loan is linked to MCLR, your interest rate will now be slightly lower.
Revised Rates and Loan Tenures
The lowest rate of 8.35 percent applies to overnight and one-month loans. For one-year loans—considered the most common tenure—the rate now stands at 8.50 percent, while for three-year loans, it is 8.60 percent. Essentially, HDFC Bank has reduced borrowing costs for both short- and medium-term loans.
Who Will Benefit From the Rate Cut?
Customers whose loans are linked to MCLR—such as home loans, car loans, and personal loans—will benefit from this cut. However, the reduction will not reflect in their EMIs immediately. Borrowers will see the impact only when their loan reset date arrives. Each loan has a predetermined reset cycle (three months, six months, or one year), and the new rate will apply from that date.
Who Will Not Benefit?
Borrowers whose loans are tied to the RBI’s Repo Rate or the External Benchmark Lending Rate (EBLR) will not see any change. This is because those loan rates depend directly on RBI’s policy rate, not on the bank’s internal cost structure.
What Is MCLR?
MCLR is the minimum lending rate below which banks cannot lend. It is determined by the bank’s internal cost structure—such as the interest paid on deposits (FDs), operational costs, and risk premium on long-term loans. Introduced by the RBI in 2016, MCLR aims to ensure transparency and faster transmission of rate changes to borrowers.
