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HDFC Bank announces to hike its MCLR rate by 5 basis points despite the reduction of the repo rate by the Central bank.
When MCLR rate increases, the EMIs for home loan, personal loan and other loans also increase.
HDFC Bank Hikes MCLR Rates: HDFC Bank, India’s largest private lender, has announced an increase in its Marginal Cost of Funds-based Lending Rate (MCLR) for the overnight tenure by 5 bps to 9.20 per cent from 9.15 per cent. The new rate is effective from February 07, 2025.
The hike by the private lender in MCLR rate came unexpectedly as the Reserve Bank of India in its February MPC meeting 2025, had unanimously decided to cut the benchmark repo rate by 25 basis points to 6.25 per cent from 6.50 per cent for the first time in nearly five years.
It is largely anticipated that the reduction in the repo rate might lead to a decrease in MCLR rates being offered by the banks. A lower MCLR rate leads to a lower EMI burden for borrowers such as home loan and personal loans.
What Is The MCLR Rate?
The Marginal Cost of the Fund-Based Lending Rate, or the MCLR, indicates the minimum interest rate a financial institution charges for a specific loan from borrowers. MCLR is dependent on the changes made to the Repo rate.
The deposit rates, repo rates, operating costs, and the cost of maintaining the cash reserve ratio are the factors that determine the MCLR rate.
When MCLR rate increases, the EMIs for home loan, personal loan and other loans also increase.
HDFC Bank MCLR Rates?
| Tenure | Previous MCLR Rate (%) | Current MCLR Rate (%) |
| Overnight | 9.15% | 9.20% |
| 1 month | 9.20% | 9.20% |
| 3 months | 9.30% | 9.30% |
| 6 months | 9.40% | 9.40% |
| 1 year | 9.40% | 9.40% |
| 2 years | 9.45% | 9.45% |
| 3 years | 9.45% | 9.45% |
Bank May Lower FD Rates Soon
Banks are expected to start lowering the rates on FDs in alignment with the decrease of the benchmark lending rate by the Central bank.
It opens a window for customers to avail the higher interest rates on fixed deposits before banks decrease them eventually. FDs are considered a safe-haven financial instrument where investors can park their capital risk-free and earn a pre-determined quarterly/half-yearly/yearly interests on the capital.
Small Finance Banks are offering the highest interest rates on fixed deposits to customers, especially senior citizens up to 9.42 per cent as of now. Utkarsh Small Finance Bank is offering 9.42 per cent interest on its deposit for senior citizens maturing in 1500 days, while the rate is 7.98 per cent for non-senior citizens.
