Today, the Reserve Bank of India (RBI) reduced the repo rate from 6.50% to 6.25%, as announced by RBI Governor Sanjay Malhotra.
This move had been anticipated by experts for some time, with expectations that it would lead to a reduction in interest rates by banks. However, contrary to expectations, HDFC Bank has raised its MCLR.
The MCLR determines the interest rates on loans such as home, car, and personal loans, and HDFC has specifically increased the overnight MCLR.
HDFC Bank increased MCLR
HDFC Bank, the largest private sector bank in the country, has surprised its customers by increasing the MCLR by 0.05 percent on some loan periods.
This hike applies specifically to the overnight period. For other periods, the MCLR has been reduced by 0.05 percent, while the rates for the remaining periods remain unchanged.
The new MCLR rates will take effect from February 7, 2025. Read on to understand how these changes in MCLR will impact you.
| Period | New MCLR (Effective 7 February 2025) | Old MCLR |
|---|
| Overnight | 9.20% | 9.15% |
| One Month | 9.20% | 9.20% |
| Three Months | 9.30% | 9.30% |
| Six Months | 9.40% | 9.40% |
| 1 Year | 9.40% | 9.40% |
| 2 Years | 9.45% | 9.45% |
| 3 Years | 9.45% | 9.45% |
HDFC Bank New MCLR Rates – Effective from 7th January 2025
- The overnight MCLR has increased from 9.15% to 9.20%.
- The one-month MCLR remains unchanged at 9.20%.
- The three-month MCLR stays the same at 9.30%.
- The six-month MCLR remains unchanged at 9.40%.
- The one-year MCLR continues at 9.40%.
- For tenures of 2 years and above 3 years, the MCLR is 9.45%, with no change.
What Happens If MCLR Increases or Decreases?
The revision of the bank’s MCLR impacts the EMI of all floating loans, including home, personal, and auto loans.
When the MCLR rises, the interest on loans also rises, and when it drops, the interest decreases.
The interest on the EMI for your home loan, car loan, or personal loan is determined by this rate.
For example, if you’re looking to buy a car or house, you may get a loan at a lower rate than before.
Additionally, existing loan borrowers may see a slight reduction in their monthly EMIs.
How is MCLR determined?
MCLR is determined by several factors, including deposit rates, the repo rate, operational costs, and the cost of maintaining the cash reserve ratio.
Changes in the RBI’s repo rate directly impact the MCLR. When the MCLR changes, it affects the interest rate on loans, which can result in higher EMIs for borrowers.
