You can now get cheaper loans from HDFC Bank
What's the story
India's largest private lender, HDFC Bank, has announced a reduction in its Marginal Cost of Funds-based Lending Rates (MCLR) by up to five basis points (bps) for select loan tenures. The revised MCLR rates now range between 8.55% and 8.75%, depending on the duration of the loan. The change will directly impact the borrowers with home loans, car loans, or personal loans linked to MCLR.
Term
What is MCLR?
The MCLR is the minimum interest rate a financial institution must charge for a particular loan. It sets the floor for interest rates on loans, unless otherwise stated by the Reserve Bank of India (RBI). HDFC Bank has kept its overnight and one-month MCLR unchanged at 8.55%, while the three-month rate remains constant at 8.60%.
Rate adjustment
Six-month and 1-year MCLR cut by 5bps
For longer loan tenures, HDFC Bank has reduced the six-month and one-year MCLR by five bps each, from 8.70% to 8.65%. The two-year MCLR has also been cut by five bps to 8.70%, while the three-year rate remains unchanged at 8.75%. This move comes even as the RBI kept its repo rate unchanged during its August monetary policy committee (MPC) meeting.
Cuts
A look at repo rate cuts
In the last three MPC meetings, the RBI had cumulatively cut the repo rate by 100bps (25bps twice and 50bps) to ease liquidity amid slowing inflation. It has now changed its stance from 'accommodative' to 'neutral.'