HDFC Bank has made a strategic move to lower its Marginal Cost of Funds-based Lending Rate (MCLR), providing a potential boost for borrowers. The new MCLR rates, effective from May 7, 2025, show a reduction of up to 15 basis points (bps) across various tenures, translating into lower interest rates for loans linked to MCLR. Here’s a breakdown of the key details:
New MCLR Rates:
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Overnight and 1-month rate: 9.00% (down 10 bps)
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3-month rate: 9.05% (down 15 bps)
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6-month rate: 9.15% (down 15 bps)
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1-year rate: 9.15% (down 15 bps)
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2-year and 3-year rates: 9.20% (down 15 bps)
Impact on Borrowers:
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A reduction of 15 bps means lower EMIs or shorter loan tenures for borrowers with loans linked to the MCLR.
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The MCLR cut is a direct result of the repo rate reduction, which lowers the cost of funds for banks, and lenders like HDFC Bank are passing on the benefit to borrowers.
What is MCLR?
The MCLR is a benchmark lending rate set by banks, used to calculate interest on floating-rate loans such as home loans, car loans, and personal loans. It determines the minimum interest rate banks can offer, and changes in MCLR can have a significant impact on borrowers’ repayment terms.
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For loans linked to MCLR, a rate cut could mean reduced monthly EMIs or a faster loan repayment period.
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Whether this benefit is passed on to borrowers depends on the loan’s reset date and whether the loan is floating or fixed-rate.
This reduction in MCLR is likely to bring some relief to borrowers, especially those with floating-rate loans, and could provide an opportunity for savings over the term of the loan.
