HDFC bank increased its MCLR rate for this tenure
India’s largest private lender, HDFC Bank, has increased its MCLR rate for the overnight tenure by 5 basis points (bps) effective from February 7, 2025. The rate has hiked from 9.15% to 9.20%. This announcement came after the Reserve Bank of India (RBI) lowered the repo rate by 25 bps, from 6.50% to 6.25%.
What is the MCLR rate?
The Marginal Cost of Fund-Based Lending Rate (MCLR) is the minimum interest rate a bank charges for a specific loan from the borrowers. It is influenced by factors like deposit rates, the cost of maintaining the cash reserve ratio, repo rates, and operating costs. It was introduced by RBI in 2016 to ensure fair pricing for borrowers. With the increase in the MCLR rate, the EMI’s for home loans, personal loan and other loans also increase.
MCLR rates of HDFC bank:
| Tenure | Previous MCLR rates (%) |
| Overnight | 9.15% |
| 1 month | 9.20% |
| 3 months | 9.30% |
| 6 months | 9.40% |
| 1 year | 9.40% |
| 2 years | 9.45% |
| 3 years | 9.45% |
Banks are expected to lower FD rates soon
Banks may lower the rates on FDs in response to the central bank’s reduction in the benchmark lending rate. It presents an opening for the customers to avail higher interest rates on their fixed deposits before banks decrease the rates.FDs are considered a safe financial instrument where investors can earn interest on capital on a quarterly/half-yearly/yearly basis. Small banks like Utkarsh Small Finance Bank are offering a high interest rate for senior citizens, i.e., 9.42%, on their deposits maturing in 1500 days, while the rate is 7.98% for non-senior citizens.
