Major setback for many people, This big bank increased your EMI so much that it made the loan expensive

Major setback for common people. If you’re feeling good about the Reserve Bank’s decision to lower the repo rate and hoping it means lower loan EMIs for you, brace yourself for some surprising news. Even with the repo rate cut, the biggest private bank in the country has actually made loans more expensive, which will directly affect your EMI.

RBI Governor Sanjay Malhotra has reduced the repo rate from 6.50% to 6.25%. Many expected that this would lead to cheaper bank loans, but HDFC Bank, the largest private bank, has quietly raised its loan rates following the announcement.

The bank has upped the Margin Cost of Lending Rates (MCLR) by 5 basis points for certain tenures. Notably, this increase only applies to the overnight period, with the MCLR going from 9.15% to 9.20%. These new rates took effect on February 7, 2025.

Here are the updated MCLR rates:

– Overnight – Increased from 9.15% to 9.20%

– One month – Stays at 9.20%

– Three months – Stays at 9.30%

– Six months – Stays at 9.40%

– One year – Stays at 9.40%

– More than 2 years – Stays at 9.45%

– Over 3 years – Stays at 9.50%.

MCLR is determined by banks based on several factors. They look at things like deposit rates, repo rates, operational costs, and the cash reserve ratio. All these costs are factored into the MCLR. When the repo rate changes, it directly impacts the MCLR that banks set.

If MCLR goes up, you’ll notice it affects the EMIs for all kinds of loans, like home loans, auto loans, and personal loans. So, if MCLR rises, existing customers will end up paying more on their loan EMIs, and new customers will also face higher rates for their loans.