HDFC Bank slashes MCLR rates, effective from May 7, 2025; check updated rates

HDFC Bank has implemented a reduction in its Marginal Cost of the Fund-Based Lending Rate (MCLR), effective from May 7, 2025. The revised rates see the overnight and one-month MCLR reduced by 10 basis points to 9.00%. Additionally, the three-month MCLR has been cut by 15 basis points to 9.05%, while the six-month rate now stands at 9.10%.

This strategic decision follows the Reserve Bank of India’s (RBI) reduction of the repo rate by 25 basis points in April 2025. The repo rate, which influences borrowing costs across the banking sector, has seen a cumulative reduction of 50 basis points since February 2025. As a result, banks like HDFC are passing on these benefits to customers with floating-rate loans, potentially reducing equated monthly instalments (EMIs) and shortening loan tenures.

The introduction of the MCLR by the RBI in 2016 was aimed at setting a minimum interest rate for specific loans, serving as a benchmark for determining interest rates on various loans, including home, personal, and auto loans. HDFC Bank’s current reductions include a 15 basis point cut in the one-year MCLR to 9.15%, followed by a 10 basis point reduction in both the two-year and three-year MCLR, now at 9.20%.

Borrowers linked to these MCLR rates may experience financial relief through lower EMIs or adjusted loan terms, depending on the nature of their agreements and reset periods. Such adjustments are crucial for maintaining a competitive edge in the lending market, particularly in the wake of regulatory changes aimed at fostering consumer-friendly practices.

While HDFC Bank’s rate cuts align with the broader banking trend of reducing lending rates, no specific competitor actions are detailed in this context. The bank’s move is significant, as it reflects a direct response to the RBI's monetary policy adjustments, aimed at reducing overall borrowing costs for consumers. 

Bank lending rates

The State Bank of India (SBI), India's largest public sector bank, has announced a decrease in its Repo Linked Lending Rate (RLLR) by 25 basis points to 8.25% (plus credit risk premium). Effective April 15, the bank has also revised its External Benchmark Based Lending Rate (EBLR) from 8.9% to 8.65%.

Punjab National Bank (PNB), the second largest public lender, has also lowered its RLLR from 8.9% to 8.65%. However, the bank spread (BSP) remains unchanged at 0.2% (20 basis points). Consequently, the final lending rate now stands at 8.85%, down from 9.1%.

Additionally, the Indian Overseas Bank (IOB) has reduced its RLLR by 25 basis points to 8.85%, down from 9.1%.