In one swoop, this announcement must have made millions of customers happy just before Holi. Ever since just after October, they announced a reduction in the MCLR. It was very much expected after the repo rate was cut by the RBI, and banks all over started announcing a cut in loan rates. HDFC Bank has reduced the MCLR by 0.05% for 2 years, thereby easing the burden of repayment on a home loan, car loan, or personal loan on the borrower.
HDFC Bank Revised MCLR Rates effective from March 7, 2025
Before Holi, HDFC – the biggest private sector bank in the country – presents relief to its customers. HDFC has cut MCLR by 0.05 percent on some tenure loans. This MCLR rate has been reduced for 2 years. All other tenures’ MCLR remains unchanged. The new MCLR rate of HDFC Bank comes into effect from March 7, 2025.
The breakdown of HDFC Bank’s new MCLR rates is as follows:
| period | New MCLR (7 March 2025) | Old MCLR |
| Ovenite | 9.20% | 9.20% |
| one month | 9.20% | 9.20% |
| Three Months | 9.30% | 9.30% |
| Six Months | 9.40% | 9.40% |
| 1 year | 9.40% | 9.40% |
| 2 years | 9.40% | 9.45% |
| 3 year | 9.45% | 9.45% |
MCLR and Its Effect on Your Loans
MCLR guidelines are the most important one to determine the interest payment on home, car, or personal loans. Accordingly, when banks change their MCLR, these changes trickle down into your Equated Monthly Installments (EMI).
- If MCLR decreases: Less interest, less EMI.
- If MCLR increases: More interest, more EMI.
Thus new borrowers became recipients of lower interest rates following this reduction, whereas existing borrowers have floating-rate loans that would definitely have their EMIs reduced in the next reset.
MCLR Determination
The following factors are used by banks to calculate MCLR:
- Prices of deposits
- Repo rate (of the RBI)
- Cost of running operations
- Cash Reserve Ratio (CRR)
Usually, a cut by the RBI in the repo rate induces a cut in MCLR by commercial banks, thereby benefiting their customers. An increase in the repo will lead to an increase in the MCLR, and thus a rise in the cost of loans.