HDFC Bank, the country’s largest private sector bank, has given a festive gift to its crores of customers ahead of Navratri by cutting loan interest rates.
The bank has reduced its MCLR (Marginal Cost of Funds Based Lending Rate) by 0.05% for select loan tenures.
Since MCLR is directly linked to loan interest rates, this move will lead to lower EMIs for 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. If the bank reduces its MCLR, then loans with floating interest rates—like home loans—become cheaper.
This means customers benefit directly from the rate cut through lower EMIs or shorter loan tenures.
HDFC Bank’s MCLR Cuts – Effective from 8 September 2025
HDFC Bank has reduced the 6-month, 1-year, and 2-year MCLR by 0.05%, while other tenures remain unchanged.
| Tenure | New MCLR (Sep 8, 2025) | Old MCLR (Aug 7, 2025) |
|---|---|---|
| Overnight | 8.55% | 8.55% |
| 1 Month | 8.55% | 8.55% |
| 3 Months | 8.60% | 8.60% |
| 6 Months | 8.65% | 8.70% |
| 1 Year | 8.65% | 8.70% |
| 2 Years | 8.70% | 8.75% |
| 3 Years | 8.75% | 8.75% |
What Does This Mean for Borrowers?
The 6-month MCLR is now 8.65%, down from 8.70%
The 1-year MCLR has also dropped to 8.65%
The 2-year MCLR is now 8.70%, down from 8.75%
No changes have been made to the 3-year or shorter tenures like overnight, 1-month, and 3-month MCLR
How Does a Change in MCLR Affect Loans?
A decrease in MCLR leads to a reduction in loan EMIs, especially for loans with floating interest rates
If MCLR goes up, borrowers may see increased EMIs or a longer loan tenure
This change is particularly helpful for home loan, car loan, and personal loan customers
How Is MCLR Calculated?
MCLR is based on:
Repo rate set by the RBI
Interest rates on bank deposits
Operating costs of the bank
CRR (Cash Reserve Ratio) requirements
When the RBI changes the repo rate, it affects the bank’s cost of funds, which in turn influences the MCLR.
Bottom Line:
HDFC Bank’s move to reduce MCLR ahead of the festive season is likely to bring relief to borrowers, especially those planning to take home loans.
With reduced EMIs, customers can now plan their finances more easily during the upcoming festivals.
