HDFC Bank customers in for a major shock! Your home loan EMIs will now be this expensive
HDFC Bank has dealt a significant blow to its customers by revising its interest rates (MCLR). The cost of 3-year loans will further increase your home loan EMI burden. However, there's some relief for small businesses. The bank has reduced the cost of short-term and business loans. These new rates are effective today.
The country's largest private bank, HDFC Bank, has made a significant decision. If you are an HDFC Bank customer, the bank has made significant changes to its lending rates, which will directly impact your monthly EMIs.
HDFC Bank has increased the Marginal Cost of Funds Based Lending Rate (MCLR) for long-term loans, specifically the three-year one, by 0.05%. This means that if your home loan or long-term loan is linked to this benchmark,
your EMI burden is almost certain to increase in the future. After the implementation of the new rates, the three-year MCLR has now increased from 8.55% to 8.60%.
Big relief for short-term borrowers
While the bank has dealt a blow to long-term borrowers, it has also provided significant relief to those seeking short-term loans. The bank has reduced the MCLR by 0.05% for overnight to six-month loans.
This decision will directly benefit companies and businesses that take out short-term loans for working capital or business expansion. Following this change, the one-month rate has dropped from 8.10% to 8.05%. Similarly, the three-month rate is 8.15%, and the six-month MCLR is now 8.30%.
No change in rates for 1-2 years
The bank has not made any changes to its MCLR for one- and two-year tenors during this entire exercise. The one-year rate for customers remains unchanged at 8.35% and the two-year rate at 8.45%. Following these latest changes, the bank's overall MCLR rates now range from 8.05% to 8.60%.
What is MCLR?
Often, the technical jargon of banking is beyond the understanding of the common man. Simply put, MCLR is the minimum interest rate below which no bank can lend to its customers.
The Reserve Bank of India (RBI) implemented it in 2016 to ensure that customers benefit from changes in interest rates in a fair and transparent manner.
Banks determine this rate by taking into account the cost of raising funds from the market, their operating expenses, and other financial parameters. Therefore, this rate is set differently for different periods, maintaining a balance between the market and customers.