HDFC Bank has revised its Marginal Cost of Lending-based interest rates (MCLR) with effect from Saturday i.e., September 7. Now, the MCLR based lending rates will be in the range of 9.10 to 9.45 percent per annum.
However, only MCLR for 3-month tenure has been raised by 5 basis points. The rates for all other tenure continue to remain the same. As the table below shows, overnight MCLR rate is 9.10 per cent and one-month MCLR rate is 9.15 percent per annum.
The three-month MCLR rate has now been raised from 9.25 per cent to 9.30 per cent. The six-month MCLR is 9.40 percent. For all long tenures, MCLR rate is 9.45 percent, shows the HDFC Bank website.
MCLR helps banks determine their interest rates for various types of loans such as home loan, business loan and personal loan, among others.
(Source: hdfcbank.com; Rates with effect from Sep 7, 2024)
What is MCLR?
MCLR stands for marginal cost of funds-based lending rates below which banks are not authorised to lend. In 2016, Reserve Bank of India (RBI) replaced the base rate system with the MCLR based lending rates. However, those borrowers who had taken loans before 2016 are still governed by the base rate or benchmark prime lending rates (BPLR) as the case may be.
The BPLR was introduced in 2003 before being phased out in 2010 by the base rate. The current interest rate regime is dictated by the MCLR which – as mentioned above – was rolled out in April 2016.
When MCLR rates are raised, your loan EMIs also go up. Since MCLR rates are more dynamic, any change in these rates lead to tweak in the interest rates, thus impacting the loan EMIs.
It is noteworthy that HDFC Bank’s current base rate is 9.40 percent which came into force on June 18 this year, the bank’s official portal reveals.