HDFC Bank Slashes Lending Rates: EMI Relief on the Horizon

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AuthorIshaan Verma|Published at:
HDFC Bank Slashes Lending Rates: EMI Relief on the Horizon
Overview

HDFC Bank has reduced its Marginal Cost of Funds-based Lending Rates (MCLR) by up to 5 basis points on select tenures, effective January 7, 2026. This move is set to lower equated monthly installments for borrowers whose loans are linked to this benchmark. The one-year MCLR, a key rate for home loans, has been decreased to 8.40%.

Lending Rate Reduction

HDFC Bank announced a reduction of up to 5 basis points in its Marginal Cost of Funds-based Lending Rates (MCLR) across select loan tenures. This adjustment, which took effect on January 7, 2026, aims to provide some financial relief to borrowers benchmarked against the MCLR.

The bank's revised MCLR now spans between 8.25% and 8.55%, contingent on the loan duration. Typically, a lower MCLR translates directly into reduced equated monthly installments (EMIs) for customers at their next payment cycle.

Key Rate Adjustments

Specific tenures saw reductions: overnight and one-month MCLRs are now 8.25%, down from 8.30%, a 5 basis point decrease. The three-month MCLR also decreased by 5 basis points to 8.30%. However, the six-month MCLR remained static at 8.40%.

Crucially for home and retail loan borrowers, the one-year MCLR has been lowered to 8.40% from 8.45%. The longer-term two-year and three-year MCLRs were unchanged, holding steady at 8.50% and 8.55%, respectively.

Understanding MCLR

MCLR, introduced in 2016, signifies the minimum interest rate at which banks can lend. It is directly tied to a bank's marginal cost of funds and is a primary determinant in loan pricing by financial institutions.

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