HDFC Bank Slashes Lending Rates, Offers Cheaper EMIs to Borrowers

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AuthorVihaan Mehta|Published at:
HDFC Bank Slashes Lending Rates, Offers Cheaper EMIs to Borrowers
Overview

HDFC Bank has lowered its Marginal Cost of Funds-based Lending Rates (MCLR) by up to 10 basis points across select tenures, effective March 7. This move could lead to marginally reduced Equated Monthly Installments (EMIs) for borrowers whose loans are tied to this benchmark, though the benefit will appear upon the loan's next interest reset date. Loans linked to external benchmarks like the repo rate remain unaffected.

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HDFC Bank has cut its Marginal Cost of Funds-based Lending Rates (MCLR) by up to 10 basis points, effective March 7. This move offers some relief to borrowers whose loans are tied to this internal benchmark. The bank's revised MCLR ranges from 8.15% to 8.55%, down from the previous 8.25% to 8.60%.

How Borrowers Benefit

This reduction could mean lower monthly payments for some HDFC Bank customers with home, auto, or personal loans linked to the MCLR. However, the actual decrease in Equated Monthly Installments (EMIs) won't appear until the loan's scheduled interest rate reset date.

MCLR Explained: Why Some Loans Are Unaffected

The MCLR system, introduced by the Reserve Bank of India in 2016, aims to link lending rates more closely to the cost of funds. However, many newer retail loans, especially home and auto loans, are now benchmarked against external rates like the RBI's repo rate. Borrowers with loans tied to these external benchmarks will not see any changes from HDFC Bank's MCLR adjustment.

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