The new MCLR rate has become effective from 7th May 2025. After the RBI reduced the repo rate, HDFC Bank has decided to reduce the MCLR.
HDFC Bank has given good news to its customers. The bank has reduced the loan rates. The country’s largest private bank has cut the Marginal Cost of Funds Based Lending Rates (MCLR). This will benefit those lenders whose loan interest rates are linked to this benchmark. The bank has reduced the MCLR by 0.15 percent on select loan periods. After this cut, HDFC Bank’s MCLR has come in the range of 9 percent to 9.20 percent.
Effect of repo rate cut
Earlier, HDFC Bank’s MCLR rate was in the range of 9.10 to 9.35 percent. The new MCLR rate has become effective from 7 May 2025. HDFC Bank has decided to reduce the MCLR after the RBI reduced the repo rate. RBI had reduced the repo rate by 0.25 percent in April. RBI has cut the repo rate by 0.50 percent since February 2025. Repo rate is the rate at which RBI gives loans to commercial banks. Reduction in repo rate reduces the cost of loan in the banking sector. After this, banks also reduce the interest rates on loans for customers.
How does MCLR work
After this decision of the bank, the EMI of customers on loans linked to MCLR like home loan will be reduced or the loan tenure will be shortened. Banks use MCLR as a benchmark rate to fix the interest rate on various floating rate loans including home loan, personal loan and auto loan. Reduction in MCLR reduces the EMI of the loan or shortens the loan tenure. This gives good benefits to the borrowers in the long term.
