HDFC Bank has delivered wonderful news to its consumers. The bank has decreased borrowing rates. The largest private bank in the country has lowered its Marginal Cost of Funds Based Lending Rate (MCLR). This will help lenders who base their loan interest rates on this benchmark. For specific loan terms, the bank reduced the MCLR by 0.15 percent. Following this, HDFC Bank’s MCLR has dropped to between 9 and 9.20 percent.
HDFC Bank Impact of Repo Rate Cut
The MCLR rate for HDFC Bank used to be between 9.10 and 9.35 percent. On May 7, 2025, the revised MCLR rate went into effect. After the RBI lowered the repo rate, HDFC Bank made the decision to lower the MCLR. In April, the RBI lowered the repo rate by 0.25 percent. Since February 2025, the RBI has lowered the repo rate by 0.50 percent. The rate at which the RBI loans to commercial banks is known as the repo rate. In the banking industry, lowering the repo rate lowers the cost of lending. Banks then reduce the interest rates on consumer borrowing.
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How does the MCLR work?
Following the bank’s decision, customers’ EMIs on MCLR-linked loans, such as home loans, would be decreased or the loan period will be shortened. Banks utilize the MCLR as a benchmark rate to determine the interest rate on various floating rate loans, such as home loans, personal loans, and auto loans. A reduction in the MCLR lowers the loan’s EMI or shortens the loan tenure. This provides significant long-term benefits to borrowers.
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