HDFC Bank, the country’s largest private bank, has given a big relief to its crores of customers by reducing interest rates on loans.
The bank has cut its MCLR (Marginal Cost of Funds Based Lending Rate) by 0.05% across most tenures, except the 2-year term.
Since MCLR directly affects loan interest rates, this reduction will benefit customers through lower EMIs on home, car, and personal loans.
What is MCLR and Why Does It Matter?
MCLR is the minimum interest rate below which a bank cannot lend. It is linked to loans like home loans, car loans, and personal loans.
If a bank reduces MCLR, it leads to a reduction in the interest rates of floating rate loans, thereby lowering monthly EMIs for borrowers.
HDFC Bank Reduces MCLR – Effective from August 7, 2025
HDFC Bank has cut MCLR by 0.05% on all loan tenures except the 2-year term. These changes are effective from August 7, 2025.
The decision was taken even though the RBI has not changed the repo rate recently. Customers will now get loans at a slightly lower interest rate, which will directly reduce their loan repayment burden.
Updated MCLR Rates (as of 7 August 2025)
| Tenure | New MCLR (Aug 7) | Old MCLR (July 7) |
|---|---|---|
| Overnight | 8.55% | 8.60% |
| 1 Month | 8.55% | 8.60% |
| 3 Months | 8.60% | 8.65% |
| 6 Months | 8.70% | 8.75% |
| 1 Year | 8.70% | 8.75% |
| 2 Years | 8.75% | 8.75% |
| 3 Years | 8.75% | 8.80% |
(Source: HDFC Bank official website)
What Does This Mean for Borrowers?
The reduction in MCLR means that borrowers with floating rate loans like home loans, car loans, or personal loans will now pay lower EMIs.
For example, if your loan is linked to the 1-year MCLR, the interest rate will decrease, which will bring down your monthly payment slightly. Over time, this can result in significant savings.
How Is MCLR Calculated?
Banks calculate MCLR based on several factors, including:
The repo rate set by the Reserve Bank of India
The cost of deposits (interest paid to customers on savings/fixed deposits)
Operating expenses
CRR (Cash Reserve Ratio) requirements
So, whenever the RBI changes the repo rate, or when the bank’s internal costs change, the MCLR is updated accordingly.
What Should Customers Do?
If you already have a loan with HDFC Bank and it is on a floating interest rate, your EMI may reduce slightly depending on when your rate is reset.
You can check with the bank for next reset dates. New borrowers will also benefit from this rate cut as they’ll get loans at slightly cheaper interest rates.
In summary, HDFC Bank’s latest move will help millions of customers manage their loan repayments better, offering relief at a time when many are dealing with financial stress.
Keep an eye on future MCLR changes and RBI announcements, as these directly affect your loan costs.
