HDFC Bank has revised its marginal cost lending based interest rates (MCLR) with effect from Saturday i.e. 7th September. Now, MCLR based lending rates will be in the range of 9.10 to 9.45 percent per annum.
However, the MCLR has been increased by 5 basis points only for a period of 3 months. Rates will remain the same for all other tenures. As the table below shows, the overnight MCLR rate is 9.10 percent and the one-month MCLR rate is 9.15 percent per annum.
The three-month MCLR rate has now been increased from 9.25 percent to 9.30 percent. Six month MCLR is 9.40 percent. HDFC Bank website shows that the MCLR rate for all long tenures is 9.45 percent.
What is MCLR?
MCLR means marginal cost of funds based lending rates below which banks are not authorized to lend.In 2016, the Reserve Bank of India (RBI) replaced the base rate system with MCLR based lending rates. However, borrowers who took loans before 2016 are still governed by the base rate or benchmark prime lending rates (BPLR), as the case may be.
BPLR was introduced in 2003 and the base rate was phased out in 2010. The current interest rate regime is determined by the MCLR, which – as mentioned above – was implemented in April 2016.
When MCLR rates increase, your loan EMI also increases. Since MCLR rates are more dynamic, any change in these rates leads to a change in interest rates, thereby impacting the loan EMI.
It is noteworthy that the current base rate of HDFC Bank is 9.40 percent which came into effect on June 18 this year, shows the official portal of the bank.
