Your HDFC Bank loans are now cheaper
What's the story
HDFC Bank has announced a reduction in its Marginal Cost of Funds-based Lending Rates (MCLR) on select tenures. The cut is by as much as 10 basis points (bps), offering some relief to borrowers whose loans are linked to this regime. A basis point is one-hundredth of a percentage point. The revised MCLR rates come into effect from today, according to information available on the bank's official website.
Rate adjustment
Rates now range between 7.90% and 8.60%
The new MCLR rates from HDFC Bank range between 7.90% and 8.60%, depending on the loan tenure. This is a slight reduction from the previous range of 8% to 8.65%.
The bank has revised its overnight and one-month MCLR to 7.90%, down from the earlier rate of 8%.
For three-month tenures, it has lowered the rate to 8.05%, down from an earlier rate of 8.15%.
Extended reductions
One-year MCLR down to 8.35%
For six-month tenures, HDFC Bank has revised the MCLR to 8.25%, down from an earlier rate of 8.30%.
The one-year MCLR has been lowered to 8.35%, down from an earlier rate of 8.40%.
For two-year tenures, the bank has cut the MCLR to 8.45%, down from an earlier rate of 8.55%.
Finally, for three-year tenures, it has reduced the rate to 8.60%, down from an earlier rate of 8.65%.
Explanation
What is MCLR?
MCLR is the minimum interest rate that a bank has to charge on a loan.
It serves as the floor for interest rates on loans, meaning borrowers can't pay less than this rate unless stated otherwise by the Reserve Bank of India (RBI).
The RBI had introduced MCLR in 2016.