Mumbai: Largest private sector bank in the country, HDFC Bank has increased its Marginal Cost of Funds-based Lending Rate (MCLR). The lender has hiked MCLR for the overnight tenure by 5 bps from 9.15 per cent to 9.20 per cent.
Rates for all other tenures are unchanged. Overall, HDFC Bank’s MCLR is from 9.20 per cent for overnight and one month tenures, to 9.45 per cent for three year tenures.
The revised HDFC MCLR Rates are as follows:
Overnight tenure — 9.20 per cent
One month tenure — 9.20 per cent
Three months tenure — 9.30 per cent
Six months tenure — 9.40 per cent
One year tenure — 9.40 per cent
Two years tenure — 9.45 per cent
Three years tenure — 9.45 per cent
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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. The base for MCLR calculations consists of operating costs, the bank’s incremental cost of funds, and a tenor premium, which offsets the risks of long-term loans.
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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