HDFC Bank trims lending rates by 10 bps, to benefit MCLR-linked borrowers

Borrowers on home, auto, and personal loans tied to MCLR to see rate changes at next reset

HDFC Bank has cut its marginal cost of funds-based lending rates (MCLR) by up to 10 basis points for select loan tenures, effective November 7. The move will bring modest relief to borrowers whose loans are linked to the MCLR, the bank’s internal benchmark for lending rates.

 

Revised rates across tenures

 

HDFC Bank’s MCLR now stands in the range of 8.35 per cent to 8.60 per cent, compared with 8.45 per cent to 8.65 per cent earlier. The updated rates by tenure are:

• Overnight and one-month: 8.35 per cent
• Three months: 8.40 per cent
• Six months: 8.45 per cent
• One year: 8.50 per cent
• Two years: 8.55 per cent
• Three years: 8.60 per cent

 

Borrowers with loans linked to these tenures will see their interest rates adjusted automatically in the next reset cycle. This means that the benefit will be reflected not immediately but when the loan’s interest rate is due for revision, depending on the borrower’s loan agreement.  ALSO READ | Maximise your savings: Top 5 credit cards to make the most of GST 2.0 

 

Who will and won’t benefit

 

The revision will impact home, auto, and personal loan borrowers whose lending rates are pegged to the MCLR. However, customers whose loans are linked to external benchmarks, such as the Reserve Bank of India’s (RBI) repo rate, will not see any change in their EMIs, as these are determined by movements in the RBI’s policy rate, not internal benchmarks.

 

What is MCLR and why it matters

 

Introduced by the RBI in 2016, the MCLR is the minimum lending rate below which banks cannot lend, except in certain cases. It takes into account factors such as:

 

• The marginal cost of funds (the rate banks pay for deposits and borrowings)
• Operating expenses
• A tenure premium, which compensates for longer loan durations

 

The MCLR mechanism was designed to improve transparency and ensure faster transmission of monetary policy to borrowers.

 

HDFC Bank’s latest revision reflects its periodic review of lending costs and market conditions. While the 10-basis-point cut is modest, it signals a slightly easier rate environment for borrowers tied to internal benchmarks, even as external benchmark-linked loans remain steady with the RBI maintaining its policy stance.