Mumbai: Largest private sector bank in the country, HDFC Bank has hiked its marginal cost of funds-based lending rate (MCLR). After this hike, the Equated Monthly Installments (EMI) of loans will become costlier for consumers. This will make loans costlier for borrowers.
The overnight MCLR has been raised by 15 basis points to 8.25%. The one-month MCLR has increased from 8.20% to 8.30%. The three-month rate has been raised by 10 basis points to 8.60%, while the six-month rate has seen a 5 basis point increase to 8.90%.
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There has been no change in the MCLR for tenures exceeding one year, which currently stands at 9.05%. Most consumer loans offered by HDFC Bank are linked to this one-year MCLR. HDFC Bank’s decision to increase MCLR will not impact home loan interest rates, as those are linked to the repo rate. Only existing personal loans and floating auto loans, which are based on MCLR, will be affected by the interest rate change.
The basic minimum rate at which a bank can give consumers loans is known as the marginal cost of funds-based lending rate or MCLR. The Reserve Bank of India (RBI) has established MCLR in 2016. It was introduced to determine the interest rates of different types of loans. Borrowers’ EMI will get expensive for those who take loans against the MCLR. There is a reset-period for MCLR-based loans, after which the rates get revised for the borrower.
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