Summary of this article
· HDFC Bank reduces MCLR by up to 15 bps, effective October 7, 2025
· Revised MCLR rates now between 8.45 per cent and 8.65 per cent
· Cheaper EMIs expected for loans linked to MCLR
HDFC Bank has revised its marginal cost of funds-based lending rates (MCLR), leading to a rate cut in the lending rates. Effective October 7, 2025, the lending rates with the bank have been reduced with an MCLR cut of 10 to 15 basis points (bps) across tenures. This decision will benefit borrowers whose loans are linked to this internal benchmark. With up to a 15 per cent cut in lending rates, the equated monthly instalments (EMIs) of the loans will have a positive impact. On the other hand, potential borrowers may find the revised rates attractive enough to apply for a loan to buy a car or book a home during the festive season.
Details Of The Rate Cut
The bank reduced the MCLR by up to 15 basis points for select loan tenures. After the revision, the MCLR rates now range between a minimum of 8.45 per cent and a maximum of 8.65 per cent. Earlier, the rate ranged between 8.55 per cent and 8.75 per cent.
• For overnight tenure, the MCLR is now 8.45 per cent.
• For one month and three months, the MCLR now stands at 8.40 per cent and 8.45 per cent, respectively. Earlier, these were 8.55 per cent and 8.60 per cent, respectively, for these two tenures.
• The six-month MCLR is now reduced by 10 bps, from 8.65 per cent to 8.55 per cent.
• One-year MCLR is also 8.55 per cent now after the latest revision.
• For a two-year tenure, the bank cut the rates by 10 bps to 8.60 per cent.
• For the longest three-year tenure, the rate was also revised with a 10 bps cut. It now stands at 8.65 per cent, reduced from the previous 8.75 per cent.
Impact On MCLR-Linked Loans
MCLR is the minimum interest rate that a bank or a financial institution must charge for a specific loan. The Reserve Bank of India (RBI) introduced MCLR rates in 2016 as a minimum limit, and lenders cannot offer loans at a lower rate than the MCLR.
A reduced MCLR means cheaper EMIs for borrowers whose loan interest rates are benchmarked against the MCLR. When a bank’s borrowing cost decreases, it may lower its MCLR, which further results in lower EMIs for bank borrowers.
However, it is important to note that not all loans are always linked to MCLR. For instance, HDFC Bank’s home loans are primarily linked with the repo rate. At present, its home loan rates range between 7.90 per cent and 13.20 per cent based on the following formula: (repo rate ‘5.50 per cent’ + 2.40 per cent to 7.70 per cent = 7.90 per cent to 13.20 per cent).
