Mumbai: India’s largest private sector bank, HDFC Bank, has revised its Marginal Cost of Lending Rate (MCLR). The updated MCLR rates now range between 9.10 per cent and 9.45 per cent per annum.
The bank has changed interest rates on just one tenure — 3-month MCLR — while keeping it unchanged for other tenures. HDFC Bank has raised its 3-month MCLR by 5 basis points from 9.25 per cent to 9.30 per cent. The overnight MCLR is 9.10 per cent, while the 1-month rate is 9.15 per cent. The 6-month rate remains at 9.40 per cent, and the rates for 1-year, 2-year, and 3-year tenures are unchanged at 9.45 per cent.
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After this rate hike, the equated monthly instalments (EMIs) of all retail loans including car, personal and home will go up. MCLR is the minimum rate of interest banks are allowed to give out loans to its customers. It is a benchmark interest rate and it dictates the lower limit of the interest rate for a loan.
Introduced on April 1, 2016, MCLR is the minimum interest rates below which banks cannot lend. It reflects the trends in banks’ cost of borrowing. In 2019, the RBI introduced the external benchmark linked rate (EBLR) – which is linked to the repo rate – to further increase the pace of monetary policy transmission. Currently, all the retail loans are linked to EBLR. While any hike or cut in the repo rate gets immediately reflected in loans linked to EBLR, banks review interest rates under MCLR regime every month at a pre-announced date.
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