HDFC Bank has announced a reduction in its lending rates just a day before the Reserve Bank of India (RBI) reveals its repo rate decision. The bank has lowered its Marginal Cost of Funds-based Lending Rate (MCLR) by 5 basis points for specific loan tenures. This decision is expected to bring down the monthly installments for various types of borrowers who have loans linked to these benchmarks.
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What are the changes in HDFC Bank MCLR rates?
The private sector lender decided to cut the MCLR by 0.05 percent or 5 basis points for selected loan periods. This move comes as a surprise to many as it precedes the official announcement from the RBI Monetary Policy Committee scheduled for tomorrow. The reduction will make borrowing slightly more affordable for those whose loans are linked to these specific benchmarks. The bank has implemented this change to offer relief to its customer base ahead of the national policy update.
How will this move benefit the common man?
When a bank reduces its MCLR, the interest rates on various floating-rate loans typically see a downward adjustment. This includes popular products like home loans, car loans, and personal loans. Existing customers will see the benefit during their next interest rate reset cycle, while new borrowers can avail of loans at the updated lower rates immediately. The 5 basis point cut will lead to a direct reduction in the interest component of the EMI.
- Interest rate cut of 5 basis points implemented by HDFC Bank
- Reduction is applicable on selected loan durations only
- The move helps in reducing the overall monthly EMI burden
- This announcement comes right before the RBI repo rate verdict tomorrow
