HDFC Bank hikes MCLR by upto 15 bps

HDFC Bank on Friday increased the benchmark marginal cost of funds-based lending rates (MCLR) by up to 15 basis points that will make car and personal loans costlier.

The MCLR has been increased by 5 basis points to 15 basis points on select tenures. The highest increase of 15 bps is on overnight tenor.

The overnight MCLR has been increased to 8.25 per cent with effect from Friday from the earlier rate of 8.10 per cent, as per HDFC Bank’s website.

The Marginal Cost of the Fund-Based Lending Rate or the MCLR is the minimum interest rate a financial institution needs to charge for a specific loan. It dictates the lower limit of the interest rate for a loan.

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HDFC Bank has increased the one-month MCLR to 8.30 per cent from 8.20 per cent. MCLR for three-month tenor has gone up by 10 basis points to 8.60 per cent. MCLR for six-month tenor has been hiked by 5 basis points. Other interest rates remain unchanged.

The move will lead to an increase in EMIs on car and personal loans that are linked to MCLR. It will not impact the borrowers whose loans are linked to external benchmark lending rates or repo rate.

Home loans are not linked to MCLR. So the increase in MCLR will not impact home loan borrowers. None of the customers of HDFC, whose accounts have been transferred to HDFC Bank following the merger, will be impacted by the hike in MCLR. Home loans are mostly linked to policy repo rate.