HDFC Bank has announced a reduction in its lending rates, bringing relief to borrowers whose loans are linked to the bank’s Marginal Cost of Funds-based Lending Rate (MCLR). The move is expected to lower EMIs for many customers across different loan tenures.
The bank has cut its MCLR by up to 15 basis points on select tenures. Following the revision, HDFC Bank’s MCLR now ranges from 8.40% to 8.65%, depending on the loan duration. Earlier, these rates ranged from 8.55% to 8.75%.
The overnight MCLR has been reduced from 8.55% to 8.45%, while the one-month rate has dropped to 8.40%. The three-month rate has been cut by 15 basis points to 8.45%, and the six-month and one-year MCLR rates are now 8.55%, down 10 basis points each. For longer tenures, the two-year rate stands at 8.60% and the three-year rate at 8.65%.
The Marginal Cost of Funds-based Lending Rate, or MCLR, is the minimum interest rate a bank can charge for a loan. It serves as the base for most home, personal, and business loans. Introduced by the Reserve Bank of India in 2016, MCLR ensures borrowers are not charged below the bank’s cost of funds unless specified.
HDFC Bank’s current base rate is 8.90%, effective from September 19, 2025. The bank’s benchmark PLR (BPLR) has also been revised to 17.40% per annum.
Home loan and personal loan borrowers linked to MCLR are likely to see a reduction in their EMIs following this revision. HDFC Bank’s home loan rates, which are linked to the Repo Rate, currently range from 7.90% to 13.20%, depending on the borrower’s profile and loan type.
The bank calculates its home loan interest rates by adding a margin of 2.4% to 7.7% over the policy repo rate. This ensures that borrowers’ rates remain aligned with broader monetary policy while reflecting the bank’s lending costs.
By lowering MCLR rates, HDFC Bank has eased the financial burden on its borrowers, particularly those with floating-rate loans. While home loan and personal loan EMIs may fall, the change also highlights how banks adjust lending rates to respond to broader economic conditions and monetary policy.
For borrowers, this is a welcome opportunity to save on interest costs, while for savers, fixed deposit rates remain an attractive, secure option.