HDFC Bank on Thursday raised its marginal cost of lending based rates (MCLR) by 5 basis points across three tenors. These tenures are overnight, one month and 3 years.
As per the latest rates which came into force on Nov 7, the MCLR rate for overnight now stands at 9.15 percent, which is 5 basis points higher than the earlier rate. The lending rates for one month tenure also rose by 5 basis points to 9.20 percent.
The lending rates for other tenures i.e., 3 months, 6 months and one year remain the same i.e., 9.3 percent, 9.45 percent and 9.45 percent, respectively.
The two-year MCLR stands at 9.45 percent whereas the three-year MCLR will now be 9.5 percent against 9.45 percent earlier. The current rates are given in the chart shared below.
It is noteworthy that the private lender raised its MCLR in September as well. Read this Livemint article for details.
What is MCLR?
MCLR refers to the marginal cost of funds-based lending rates below which lenders are not permitted to lend. In 2016, the Reserve Bank of India (RBI) replaced the base rate system with the MCLR based lending rates. However, those borrowers who had taken loans before 2016 are still governed by the base rate or benchmark prime lending rates (BPLR) as the case may be.
The BPLR was introduced in 2003 before being phased out in 2010 by the base rate. The current interest rate regime is dictated by the MCLR which – as mentioned above – was rolled out in April 2016. HDFC Bank charges 17.95 percent as Benchmark PLR and 9.45 percent as base rate with effect from Sept 9.
When MCLR rates are raised, loan EMIs also typically go higher. Since MCLR rates are more dynamic, any change in these rates lead to tweaks in the interest rates, thus impacting the loan EMIs.
