Mumbai: HDFC Bank has reduced its Marginal Cost of Funds-Based Lending Rate (MCLR) by 5 to 15 basis points across different tenures, offering potential relief to borrowers whose loans are linked to the benchmark.
The revised rates came into effect from October 7. Interestingly, the move comes even as the Reserve Bank of India (RBI) raised the repo rate by 25 basis points to 5.50 percent.
Short-Term Rates Cut
HDFC Bank has reduced its overnight MCLR by 10 basis points to 7.80 percent from 7.90 percent. The one-month MCLR has seen the biggest reduction of 15 basis points, falling to 7.75 percent from 7.90 percent.
The three-month MCLR has been lowered by 10 basis points to 7.95 percent from 8.05 percent.
For the six-month tenure, the rate has been reduced to 8.15 percent from 8.25 percent.
Longer-Tenure MCLR Also Lower
The one-year MCLR, an important benchmark for several loans, has been cut by 5 basis points to 8.30 percent from 8.35 percent.
Similarly, the two-year MCLR has been lowered to 8.40 percent from 8.45 percent, while the three-year rate has declined to 8.55 percent from 8.60 percent.
The revised MCLR rates are 7.80 percent overnight, 7.75 percent for one month, 7.95 percent for three months, 8.15 percent for six months, 8.30 percent for one year, 8.40 percent for two years and 8.55 percent for three years.
Will Your EMI Fall?
The benefit will depend on whether a borrower's loan is linked to MCLR and when its interest rate is scheduled for reset.
A reduction in MCLR does not automatically result in an immediate or equal reduction in every borrower's lending rate. The final interest rate also depends on the spread charged by the bank and other terms of the loan.
Borrowers whose loans are linked to external benchmarks, including the RBI repo rate, will not be directly affected by the MCLR revision. Such lending rates are determined separately using applicable external benchmarks.
