HDFC Bank Cuts MCLR Rates: HDFC Bank, the country’s largest private sector lender, has reduced its Marginal Cost of Funds-based Lending Rate (MCLR) across select tenures, offering relief to borrowers with MCLR-linked loans.
The bank announced a cut of up to 5 basis points (bps) effective Tuesday, bringing its MCLR rates down to a range of 8.25% to 8.55% per annum.
Rate Cuts Across Key Tenures
The revised rates show reductions in four out of six tenure categories:
- Overnight and 1-month MCLR: 8.25% (down from 8.30%)
- 3-month MCLR: 8.30% (down from 8.35%)
- 1-year MCLR: 8.40% (down from 8.45%)
- 6-month, 2-year, and 3-year MCLR: Unchanged at 8.40%, 8.50%, and 8.55% respectively
The one-year MCLR, which serves as the benchmark for most home loans, now stands at 8.40%, down 5 basis points from the previous rate.
What It Means for Borrowers
Customers with existing loans tied to MCLR will see a direct benefit through lower equated monthly installments (EMIs) or reduced loan tenures, depending on their loan terms. New borrowers taking loans from January 7 onwards will also benefit from the lower rates.
“This is particularly good news for home loan customers and those looking to refinance their existing loans,” said a banking analyst who tracks retail lending trends.
Understanding MCLR
MCLR is the minimum interest rate below which a bank cannot lend. Introduced by the Reserve Bank of India in 2016, it ensures quicker transmission of policy rate changes to borrowers compared to the older base rate system.
HDFC Bank’s base rate currently stands at 8.90%, while its benchmark prime lending rate (BPLR) is 17.40% per annum, applicable from September 19, 2025.
Market Context
The rate cut comes amid improved liquidity conditions in the banking system and competitive pressure among lenders to attract retail borrowers. While the reduction is modest, it reflects the bank’s response to evolving market dynamics and funding costs.
Industry watchers note that with inflation showing signs of moderation, there could be room for further rate adjustments in the coming months, though much will depend on the RBI’s monetary policy stance.
Yogesh Kolhe is a market and business news author with a focus on the automobile sector and gold and silver price movements, offering readers practical insights into industry and market trends.
