HDFC Bank, the largest private sector bank in the country, has announced a New Year gift for its customers by reducing the Marginal Cost of Funds based Lending Rate (MCLR) by 0.05 percent for certain loan tenures. This adjustment applies to overnight, six-month, one-year, and three-year loans, while the MCLR for other periods remains unchanged. The revised MCLR rates will take effect from January 7, 2025. It is important to understand how these changes in MCLR can impact you.
MCLR adjustment
The overnight MCLR has been adjusted from 9.20% to 9.15%, reflecting a decrease of 0.05%. The one-month MCLR remains stable at 9.20%, with no alterations made.
The three-month MCLR is unchanged at 9.30%.
The six-month MCLR has been lowered from 9.45% to 9.40%, marking a 0.05% reduction.
Similarly, the one-year MCLR has also decreased from 9.45% to 9.40%, with a 0.05% reduction.
For tenures exceeding two years, the MCLR remains at 9.45%, with no changes.
For periods longer than three years, the MCLR has been reduced from 9.50% to 9.45%, reflecting a 0.05% decrease.
How this can effect customers
These MCLR adjustments will influence the Equated Monthly Installments (EMIs) for various floating-rate loans, including home, personal, and auto loans. An increase in MCLR leads to higher loan interest rates, while a decrease results in lower rates. Consequently, if you are considering purchasing a car or a home, you may benefit from more affordable loan options. Additionally, existing borrowers may see a slight reduction in their monthly loan EMIs.
Numerous elements are evaluated when determining the Marginal Cost of Funds based Lending Rate (MCLR). These factors encompass the deposit rate, repo rate, operational expenses, and the costs associated with maintaining the cash reserve ratio. Fluctuations in the Reserve Bank’s repo rate influence the MCLR. Consequently, any adjustments in the MCLR will impact the interest rate applicable to your loan, leading to an increase.
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