HDFC Bank, India's largest private sector bank, has lowered its Marginal Cost of Funds-based Lending Rate () by 5 s across various tenures. This move could potentially make home, auto, and other retail loans cheaper for many borrowers, especially those whose loans are linked to MCLR.
9.05%
One-year MCLR (HDFC Bank)
Earlier: 9.10%→9.05%
⏳ Time Machine
How today’s news fits into the bigger picture
April 2016
RBI introduces MCLR system.
The Reserve Bank of India introduced the Marginal Cost of Funds-based Lending Rate () to improve the transmission of its policy rate changes to bank lending rates, replacing the less effective Base Rate system. This aimed for greater transparency and responsiveness in loan pricing.
June 2019
Banks cut lending rates aggressively.
Following a series of cuts by the RBI, several major Indian banks, including HDFC Bank, announced significant reductions in their , triggering a competitive environment to attract borrowers. The one-year MCLR for many banks dropped below 8.5%.
March 2020
Emergency rate cuts amidst pandemic.
The RBI slashed its by a total of 115 s between March and May 2020 to cushion the economic impact of the COVID-19 pandc. Banks, in turn, passed on some of these benefits through adjustments and by linking new loans to external benchmarks.
May 2022 – March 2023
Repo rate hikes begin.
To combat rising inflation, the RBI raised the by 250 s from May 2022 to February 2023, reaching 6.50%. Banks responded by increasing their , leading to higher s for floating-rate loan customers.
August 7, 2026
RBI keeps repo rate unchanged.
In its latest monetary policy review, the Reserve Bank of India maintained the at 5.25% for the fourth consecutive meeting, indicating a watchful stance on inflation and economic growth. This stability provided banks with room for internal rate adjustments.
Today
HDFC Bank cuts its MCLR by 5 basis points, potentially making loans cheaper.
What happens next?
Other major banks are expected to review their own lending rates in the coming weeks to remain competitive.
HDFC Bank, India's largest private sector lender, has announced a 5 basis point (0.05%) reduction in its Marginal Cost of Funds-based Lending Rate (MCLR) across most loan tenures, effective today. This adjustment means that floating-rate loans, including home, auto, and personal loans, whose interest rates are tied to the MCLR, could see a slight decrease in their equated monthly installments (EMIs). While new borrowers might immediately benefit, existing borrowers will experience the change based on their loan's reset cycle. The reduction follows a period where the Reserve Bank of India (RBI) has kept its policy repo rate steady, prompting banks to adjust their internal lending rates in response to market liquidity and competitive pressures.
💭 If you're wondering…
A basis point is a common unit of measure in finance, equal to one-hundredth of one percentage point (0.01%). So, 5 basis points is 0.05%.
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