HDFC Bank, the largest private sector bank in the country, has given a special gift to its customers ahead of Holi.
The bank has reduced the Marginal Cost of Funds Based Lending Rate (MCLR) by 0.10% across all tenures. This cut in MCLR will lower the EMIs for home, car, and personal loans.
Earlier this year, the Reserve Bank of India (RBI) lowered the repo rate, and there are expectations of another cut in the upcoming RBI meeting in April.
HDFC Bank has preemptively reduced its MCLR even before the RBI’s decision.
HDFC Bank MCLR Reduction
The MCLR, which determines the interest rates for loans like home, car, and personal loans, has been reduced by HDFC Bank. Effective from April 7, 2025, the new MCLR rates are as follows:
| Tenure | New MCLR (7 April 2025) | Old MCLR |
|---|---|---|
| Overnight | 9.10% | 9.20% |
| One Month | 9.10% | 9.20% |
| Three Months | 9.20% | 9.30% |
| Six Months | 9.30% | 9.40% |
| One Year | 9.30% | 9.40% |
| Two Years | 9.30% | 9.40% |
| Three Years | 9.35% | 9.45% |
How MCLR Affects Loans
The MCLR directly impacts the interest rates on floating-rate loans, such as home, car, and personal loans.
When MCLR decreases, as it has now, the interest rates on these loans drop, reducing the EMIs for existing borrowers.
This is also beneficial for new loan applicants, as they will receive loans at lower interest rates.
What Determines MCLR?
Banks set their MCLR based on factors like deposit rates, repo rate, operational costs, and the cash reserve ratio (CRR).
The RBI’s changes to the repo rate directly affect the MCLR. When the RBI cuts the repo rate, banks can lower their MCLR, which makes loans more affordable.
Conversely, if the repo rate rises, the MCLR increases, leading to higher loan EMIs.
