HDFC Bank’s MCLR Revision: How It Impacts Your Loan EMIs

HDFC Bank has increased its MCLR for the overnight tenure by 5 bps, setting it at 9.20%. This rate action follows RBI’s 25 basis point repo rate cut.

RBI’s Latest Rate Action

HDFC Bank has increased its Marginal Cost of Funds-based Lending Rate (MCLR) for the overnight tenure by 5 basis points (bps), from 9.15% to 9.20%, effective February 7, 2025.

This hike follows the Reserve Bank of India’s (RBI) first rate cut in five years, which saw the repo rate reduced by 25 bps, from 6.5% to 6.25%.

MCLR Rates Unchanged for Other Tenures

The bank kept the MCLR rates unchanged for all other tenures, which are as follows:

Overnight: 9.20%

1 month: 9.20%

3 months: 9.30%

6 months: 9.40%

1 year: 9.40%

2 years: 9.45%

3 years: 9.45%

With this revision, HDFC Bank’s MCLR now ranges from 9.20% to 9.45%. Borrowers with loans linked to MCLR will see an increase in their EMIs when the MCLR rates fluctuate.

Understanding MCLR and Its Impact

MCLR (Marginal Cost of Funds-based Lending Rate) is the minimum interest rate at which banks can lend. Introduced by the Reserve Bank of India (RBI) in 2016, it replaced the older base rate system.

MCLR is based on the bank’s cost of borrowing and aims to make lending rates more transparent and responsive to changes in the market. When MCLR increases, borrowers with loans linked to MCLR see a rise in their EMI payments. Similarly, a decrease in MCLR leads to lower EMIs for those with linked loans.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.