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HDFC Bank hikes MLCR rate for overnight tenure by 5 bps to 9.20%, other tenures unchanged
HDFC Bank has raised its MCLR for overnight loans by 5 bps to 9.20 per cent effective February 7, 2025, while other tenures remain unchanged.
Private lending major HDFC Bank has increased its Marginal Cost of Funds-based Lending Rate (MCLR) for the overnight tenure by 5 bps from 9.15 per cent to 9.20 per cent. This is effective from February 7, 2025, according to the bank's website.
Rates for all other tenures are unchanged. Overall, HDFC Bank's MCLR is from 9.20 per cent for overnight and one month tenures, to 9.45 per cent for three year tenures.
The revised HDFC MCLR Rates are as follows:
- Overnight tenure — 9.20 per cent
- One month tenure — 9.20 per cent
- Three months tenure — 9.30 per cent
- Six months tenure — 9.40 per cent
- One year tenure — 9.40 per cent
- Two years tenure — 9.45 per cent
- Three years tenure — 9.45 per cent
RBI MPC Cuts Repo Rate
Notably, HDFC Bank's MCLR rate hike for the overnight tenure has been hiked despite the Reserve Bank of India (RBI) cutting repo rates by 25 bps to 6.25 per cent from 6.50 per cent. The repo rate cut — the central bank's first in five years, was announced by new RBI Governor Sanjay Malhotra on February 7, 2025.
What is MCLR?
The marginal cost of funds-based lending rate, implemented to make lending rates more dynamic and representative of the state of the economy, is the lowest interest rate at which banks are permitted to charge on loans. The base for MCLR calculations consists of operating costs, the bank's incremental cost of funds, and a tenor premium, which offsets the risks of long-term loans.
Factors determining MCLR
- Cost of borrowing and returns on equity are captured under the marginal cost of funds, with borrowing expenses normally accounting for 92% of the weight.
- Operating costs of collecting and servicing loans.
- The cash reserve ratio, or CRR, is the cost of maintaining the required reserves with the RBI.
- Tenor premium is an extra fee charged on long term loans so that the risks can be distributed over a longer period.
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Business NewsMoneyPersonal FinanceHDFC Bank hikes MLCR rate for overnight tenure by 5 bps to 9.20%, other tenures unchanged
First Published:9 Feb 2025, 12:29 PM IST
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