HDFC Bank has revised its Marginal Cost of Funds-based Lending Rate (MCLR). The bank has reduced the 2-year MCLR by 5 basis points (bps). Other loan tenures remain unchanged.
New MCLR Rates Effective from March 7, 2025
The new MCLR rates are effective from March 7, 2025. The updated rates will now range between 9.20 per cent and 9.45 per cent. Borrowers with loans linked to MCLR will see an impact on their EMIs as per the changes.
Understanding MCLR
The Marginal Cost of Funds-based Lending Rate (MCLR) is the minimum rate at which banks lend to customers. The Reserve Bank of India (RBI) introduced MCLR in 2016. It ensures fair pricing for borrowers and prevents excessive interest rates.
Impact on Borrowers
When MCLR decreases, loan EMIs also come down. This is beneficial for borrowers who have loans linked to MCLR. The recent reduction in the 2-year MCLR may slightly lower borrowing costs for some customers. However, since other loan tenures remain unchanged, not all borrowers will see an impact.
Who is Affected?
Borrowers with loans taken before 2016 are still linked to the base rate or the Benchmark Prime Lending Rate (BPLR). These borrowers will not see an immediate benefit from the recent MCLR change. Those with loans tied to the 2-year MCLR may experience a small reduction in EMIs.
No Immediate Impact on Long-Term Loans
For borrowers considering long-term loans, the recent MCLR revision may not provide immediate relief. Since only the 2-year MCLR has been reduced, the impact on longer-tenure loans is minimal.
HDFC Bank’s decision to lower the 2-year MCLR brings marginal relief to some borrowers. However, customers with loans linked to other tenures will not see any changes. The bank continues to maintain stability in its lending rates for most categories.
