HDFC Bank, the country's largest private sector lender, has raised its marginal cost of lending rate (MCLR) across all tenors by 35 basis points (bps).
A 100 basis points equals 1 per cent. After the latest HDFC Bank MCLR hike, loan EMIs may increase by 35 per cent.
The MCLR refers to the minimum interest rate below which financial institutions can't lend, except in certain cases.
The HDFC Bank MCLR rate hike was announced as the Reserve Bank of India’s Monetary Policy Committee has started its meetings and will announce the policy tomorrow. A rate hike is expected amid rising inflation.
The revision in MCLR hike will impact interest on loans for new and existing borrowers which are set to increase, including equated monthly installments (EMIs) for home loan, vehicle loan and any other loan related to marginal cost.
According to the HDFC Bank's website, after the latest rate increase, its overnight MCLR stands at 7.50 percent, while one-month MCLR is 7.55 percent. Three- month and six-month MCLR stand at 7.60 percent and 7.70 percent respectively.
The one-year MCLR, on which a bulk of consumer loans are pegged, will be 7.85 percent after the newest review as against 7.50 percent earlier. The overnight MCLR will be 7.50 percent against 7.15 percent, while the three-year MCLR will be 8.05 percent compared to 7.70 percent. It can be noted that the rate hikes come at a time when credit growth is not very high and banks are keen to accelerate on the same. There have been hikes in deposit rates as well, which have preceded the lending rate hikes, along with the change in the policy environment.
On May 7, HDFC Bank had increased its MCLR rates by 25 basis points, after the RBI had hiked its repo rates by 40 basis points.
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