HDFC Bank has hiked its marginal cost of funds-based lending rates (MCLR) for the overnight tenure by 5 basis points (bps) from 9.15 per cent to 9.20 per cent. The update will be implemented on February 7, 2025 onwards, according to the bank’s website.
Rates of all other tenures will remain the same. Overall, HDFC Banks’ MCLR has been fixed at 9.20 per cent for overnight as well as one-month tenure, and 9.45 per cent for three-year tenure.
Revised HDFC MCLR Rates
Overnight tenure — 9.20 per cent
One-month tenure — 9.20 per cent
Three months tenure — 9.30 per cent
Six months tenure — 9.40 per cent
One-year tenure — 9.40 per cent
Two years tenure — 9.45 per cent
Three years tenure — 9.45 per cent
RBI MPC Cuts Repo Rate
What Is MCLR and its Impact?
MCLR is the minimum rate of interest a bank sets for loans. It is usually the lower limit for lending rates unless it is changed by the central bank. The RBI launched MCLR in 2016 to enable fair pricing for borrowers.
Borrower with loans associated with MCLR will get the impact of changes in their equated monthly instalments (EMIs) on loans, whenever MCLR rates are changed.
For a borrower who took a loan before 2016, the base rate or the benchmark prime lending rate (BPLR) will still be applicable.
In case of an increase in MCLR, EMIs for loans, including home loans, personal loans, business loans, and so on will also increase. MCLR rate is directly proportional to the rate of interest of a loan linked with MCLR.
How Does A Bank Decide MCLR?
The cost of borrowing depends on the marginal cost of funds, with borrowing expenses usually accounting for 92 per cent of the weight. These are calculated on the basis of:
Operating fee of collection and servicing of loans
Cash reserve ratio or CRR, which is the cost of maintaining the needed reserves with RBI, and
Tenure premium, which is an extra fee applicable on long-term loans in order to distribute the risk over a long period.
