Interest rate hike: HDFC Bank has announced an increase in its Marginal Cost of Funds-Based Lending Rates (MCLR) by up to 10 bps on select tenures. MCLR is determined by the banks and the EMI of a loan will increase or decrease based on it.
An increase of 10 bps points means the HDFC Bank EMIs will become more costly for individuals availing loans tied to these MCLR rates. Various consumer loans including personal, auto, and home loans are linked to the MCLR.
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The increase of 10bps is implemented, starting with the overnight MCLR. Overnight rates are the rates at which banks lend funds to each other at the end of the day in the overnight market. The interest rate after hike in MCLR on various tenor is as follows:
Meanwhile, the Reserve Bank of India has kept the repo rate unchanged at 6.5% for the sixth consecutive time.
The Marginal Cost of Funds-Based Lending Rate (MCLR) is the minimum interest rate that financial institutions must charge for specific loans, serving as the lower limit for loan interest rates. The rates are determined by the borrowers unless modified by the Reserve Bank of India (RBI)