HDFC Bank has announced the reduction in its Marginal Cost of Funds-Based Lending Rate (MCLR) by up to 5 basis points (bps) on select tenures to benefit millions of customers before the Holi festival. From January 7, 2025, this adjustment takes the bank’s MCLR to 9.15% to 9.45%, reducing the Equated Monthly Instalments (EMIs) that borrowers might have to pay in the future.
Effective January 7, 2025, the following MCLR rates shall apply:
Onetime Marginal Cost of Funds Based Lending Rate (MCLR): Effective January 7, 2025, the MCLR will be reduced by 5 bps for all tenures and will range between 9.15 percent.
New MCLR Rates:
Overnight MCLR: Reduced by 5 bps to 9.15%
One-Month MCLR: Holds at 9.20%
Three-Month MCLR: Holds at 9.30%
Six-Month MCLR: Reduced by 5 bps to 9.40%
One-Year MCLR: Reduced by 5 bps to 9.40%
Two-Year MCLR: Remains unchanged at 9.45%
Three-Year MCLR: Reduced by 5 bps to 9.45%
This MCLR reduction will impact the EMIs of different kinds of loans that are linked to these rates, such as personal loans and business loans. Hence, borrowers will have lighter pockets and it may be a good time for anyone looking to get a new loan or remake existing ones.
The MCLR system was launched by the Reserve Bank of India (RBI) in 2016 and replaced the base rate system to facilitate more frequent changes in the lending rates. It is the minimum rate at which the banks can not lend. Changes in MCLR affect the EMIs on the loans, meaning that they will be either more expensive or cheaper depending on the rates change.
Borrowers under the older regimes like base rate or Benchmark Prime Lending Rate (BPLR) introduced before 2016 are not affected by the MCLR changes unless they decide to migrate to the new system. HDFC Bank’s Benchmark PLR as of September 2024 is 17.95% and the base rate is 9.45%.
This is a deliberate rate decrement by HDFC Bank in its effort to accomplish its mission of making it easier for its customers to borrow especially during the festive seasons, thereby increasing consumer utter contentment and financial participation.
