HDFC Bank has reduced its Marginal Cost of Funds based Lending Rate (MCLR), effective May 7, 2025. This move follows the Reserve Bank of India's (RBI) repo rate cut and will benefit borrowers with loans linked to the MCLR.
HDFC Bank has good news for its customers. The bank has reduced loan interest rates. The country's largest private bank has cut the Marginal Cost of Funds based Lending Rate (MCLR). This will benefit borrowers with loan interest rates linked to this benchmark. The bank has reduced the MCLR by 0.15% for select loan tenures.
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HDFC Bank's MCLR
Previously, HDFC Bank's MCLR ranged from 9.10% to 9.35%. The new MCLR is effective from May 7, 2025. HDFC Bank decided to reduce the MCLR after the RBI cut the repo rate. The RBI cut the repo rate by 0.25% in April. The RBI has reduced the repo rate by 0.50% since February 2025. The repo rate is the rate at which the RBI lends to commercial banks. Lowering the repo rate reduces the cost of borrowing in the banking sector. Following this, banks also reduce interest rates on loans for customers.
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Home loans
After this decision by the bank, the EMI for customers with loans linked to MCLR, such as home loans, will be reduced, or the loan tenure will be shortened. Banks use MCLR as a benchmark to set interest rates for various floating rate loans, including home loans, personal loans, and auto loans. A reduction in MCLR lowers the loan's EMI or shortens the loan tenure. This offers good benefits to long-term borrowers.
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