Lending Rates

The country's largest private-sector lender increased lending benchmarks across tenors, with the sharpest rise in the two-year MCLR despite an unchanged policy rate

Private sector lender HDFC Bank has increased the Marginal Cost of funds-based Lending Rate (MCLR) by up to 10 basis points across tenors effective June 8, 2026. The maximum hike of 10 basis points was for loans having a maturity of two years to 8.55 per cent from the earlier 8.45 per cent. The benchmark one-year MCLR has been revised up by 5 basis points to 8.40 per cent, as per the data available on the HDFC Bank website. The one-year rate is used to fix most consumer loans, such as auto, personal and home loans. The overnight, three-month, six-month and three-year tenor MCLRs have been raised by 5 basis points to 8.10 per cent, 8.20 per cent, 8.35 per cent and 8.65 per cent, respectively. The MCLR hike decision comes days after the Reserve Bank on Friday expectedly kept interest rates unchanged for the second time in a row as it weighed the impact of rising energy prices and supply disruptions caused by the West Asia crisis.

Bank lending rates rose in April despite an unchanged repo rate, supported by strong credit demand, while deposit rates continued to soften

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The RBI's initiative, due to take effect from April 1, follows a series of steps taken by the government and market regulator to cool the explosive growth in the country's equity derivatives market

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In the last three months, the WALR on fresh loans declined by 17 bps for the banking sector

Following the RBI's 100-bps policy rate cut, private banks showed faster transmission to lending rates, while PSBs led in passing on deposit rate reductions

RBI data shows lending rates on fresh and outstanding loans fell six bps in August, while the one-year median MCLR of banks stayed unchanged at 8.60 per cent in September

Private sector Karur Vysya Bank on Friday reduced the marginal cost of funds-based lending rate (MCLR) by 10 basis points (0.10 percentage points) across all tenors, making loans linked to the benchmark cheaper. The benchmark one-year tenor MCLR, which is used to price most consumer loans like auto and personal, will be at 9.45 per cent against the existing rate of 9.55 per cent, Karur Vsysa Bank said in a regulatory filing. Among others, the rate of one-month, three-month, and six-month tenors will be in the range of 9.30-9.45 per cent. The MCLR on overnight tenor will be 9.15 per cent against 9.25 per cent. The new MCLR of the bank will come into effect from September 7, it said. It is to be noted that the Reserve Bank of India (RBI) last month kept its benchmark lending rate unchanged at 5.5 per cent.

The move follows the central bank's decision last week to conduct a seven-day variable rate reverse repo auction worth Rs 1 trillion

Hours after RBI's jumbo rate cut, state-owned Punjab National Bank (PNB) on Friday announced up to 50 basis points reduction in lending rate, a move which will help existing and new borrowers. Other banks are also expected to make similar announcements soon. "Great News for Our Valued Customers! Punjab National Bank Makes Your EMIs More Affordable! Following the repo rate cut (6.00% - 5.50%), Punjab National Bank has reduced its RLLR by 50 bps, effective from June 9, 2025," PNB said in a post on X. With the reduction in the benchmark repo-linked benchmark lending rates (RBLR), the home loan of the bank will start from 7.45 per cent while vehicle loans from 7.8 per cent per annum. Earlier in the day, the Reserve Bank of India (RBI) cut interest rates by a larger-than-expected 50 basis points, and unexpectedly reduced the cash reserve ratio for banks to make available more money to lend in a bid to boost the economy. The RBI's six-member monetary policy committee, headed by Governor

Lending-deposit rate spread for banks dropped to 2.71 per cent in March, driven by lower lending rates amid reduced high-yield loan exposure and RBI rate cuts

RBI data suggest that during the tightening period, the transmission on fresh deposits and loans was higher for state-owned banks than for private sector banks

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The one-year loan prime rate (LPR) was lowered by 25 basis points to 3.10 per cent from 3.35 per cent,

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The one-year MCLR has risen to 8.85%, while the six-month and three-month MCLR rates have been increased to 8.65% and 8.45%, respectively

With the repricing of loans and higher lending rates for fresh loans, the net interest margins improved from a low of 1.89 per cent in Fy20