In a welcoming measure for borrowers, HDFC Bank, the largest private sector bank of India, lowered the Marginal Cost of Funds Based Lending Rate (MCLR) by 0.10% across all tenures. This change, taking effect from 7th April 2025, will be a boon for millions of home loan, car loan, and personal loan customers, as their EMI is expected to get cheaper.
This strategic decision comes right ahead of the central bank’s forthcoming monetary policy committee meeting in April, where repo rate cut chances are widely discussed. With this decision to lower MCLR in anticipation of the repo rate cut, HDFC Bank has perhaps taken a bold step in the direction of making its borrowers feel that it cares for them by providing a benefit even before it becomes a public policy.
HDFC Bank’s Revised MCLR Rates (Effective 7th April 2025)
| Tenure | New MCLR (%) | Previous MCLR (%) |
|---|---|---|
| Overnight | 9.10% | 9.20% |
| One Month | 9.10% | 9.20% |
| Three Months | 9.20% | 9.30% |
| Six Months | 9.30% | 9.40% |
| One Year | 9.30% | 9.40% |
| Two Years | 9.30% | 9.40% |
| Three Years | 9.35% | 9.45% |
How MCLR Reduction Impacts Your Loans
When banks adjust their MCLR, it directly affects floating-rate loans, including:
- Home Loans
- Car Loans
- Personal Loans
What Happens When MCLR Falls?
- EMIs decrease – Borrowers pay less interest, easing financial burdens.
- New loans become cheaper – Prospective borrowers benefit from lower rates.
- Increased affordability – Lower EMIs improve loan eligibility for many.
Conversely, an MCLR hike would have raised interest costs, making loans more expensive. This reduction, therefore, comes as a breath of fresh air for borrowers.
How Is MCLR Determined?
Banks calculate MCLR based on several key factors:
- Deposit Rates – Interest paid on customer deposits.
- Repo Rate – The rate at which the RBI lends to banks.
- Operational Costs – Bank’s internal expenses.
- Cash Reserve Ratio (CRR) – Mandatory reserves maintained with RBI.
Since the RBI reduced the repo rate earlier this year, banks have been under pressure to transmit these benefits to customers. HDFC Bank’s proactive rate cut aligns with this trend, ensuring better loan affordability.