On May 7, 2025, HDFC Bank, India’s largest private sector bank, reduced its MCLR (Marginal Cost of Funds Based Lending Rate) by 0.10% to 0.15%.
This change will lower the EMI (Equated Monthly Installments) for home, car, and personal loans.
After the RBI’s two cuts in the repo rate, many banks, including HDFC, have reduced interest rates, particularly on fixed deposits and MCLR.
HDFC Bank’s New MCLR Rates
The updated MCLR rates, effective from May 7, 2025, are as follows:
| Period | New MCLR (7 May 2025) | Old MCLR |
|---|---|---|
| Overnight | 9.00% | 9.10% |
| One month | 9.00% | 9.10% |
| Three months | 9.05% | 9.20% |
| Six months | 9.15% | 9.30% |
| One year | 9.15% | 9.30% |
| Two years | 9.20% | 9.30% |
| Three years | 9.20% | 9.35% |
HDFC Bank has reduced MCLR across all periods, bringing the overnight and one-month MCLR to 9.00%, while the three-month rate is now 9.05%.
The six-month and one-year MCLRs are at 9.15%, and the two and three-year rates are now at 9.20%.
Impact of MCLR Changes
A change in MCLR directly affects the EMI for floating-rate loans, including home, car, and personal loans.
When MCLR rises, loan interest rates increase, resulting in higher EMIs for borrowers. Conversely, when MCLR decreases, interest rates drop, reducing EMIs and making new loans cheaper.
How MCLR is Determined
MCLR is influenced by factors like deposit rates, repo rates, operational costs, and the cash reserve ratio (CRR).
A decrease in the RBI’s repo rate typically leads to a reduction in MCLR, making loans more affordable. However, an increase in the repo rate raises MCLR and loan EMIs.
