India’s largest private sector bank, HDFC Bank, has given relief to crores of its customers by reducing its Marginal Cost of Funds Based Lending Rate (MCLR).
The bank has announced a 0.05 percent (5 basis points) cut in MCLR for select loan tenures. This reduction applies to the overnight, one-month, and three-month periods.
This move comes after the Reserve Bank of India (RBI) reduced the repo rate from 5.50% to 5.25% in December 2025.
Since the RBI’s decision, several banks across the country have lowered interest rates on home loans, personal loans, and fixed deposits (FDs).
HDFC Bank’s latest decision follows the same trend and is aimed at passing on the benefit to customers.
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Second MCLR Cut After RBI Repo Rate Reduction
This is the second time HDFC Bank has reduced its MCLR following the RBI’s repo rate cut. Customers whose loans are linked to MCLR, RLLR (Repo Linked Lending Rate), or RBLR (Repo Based Lending Rate) will benefit directly from this decision.
A reduction in MCLR generally leads to lower interest rates on home loans and other retail loans, which can reduce monthly EMIs or shorten the loan tenure.
Existing borrowers linked to these rates are expected to see a positive impact during their next interest rate reset cycle.
Latest MCLR Rates Announced by HDFC Bank
HDFC Bank has reduced its MCLR by 5 basis points, bringing the new MCLR range to 8.25% to 8.55%, compared to the earlier range of 8.30% to 8.60%.
These revised rates are applicable to customers whose home loans or other retail loans are directly linked to MCLR.
Below are the updated MCLR rates:
| Loan Period | New MCLR – January 7, 2025 | Earlier MCLR – December 7, 2025 |
|---|---|---|
| Overnight | 8.25% | 8.30% |
| One Month | 8.25% | 8.30% |
| Three Months | 8.30% | 8.35% |
| Six Months | 8.40% | 8.40% |
| One Year | 8.40% | 8.45% |
| Two Years | 8.50% | 8.50% |
| Three Years | 8.55% | 8.55% |
As seen in the table, short-term tenures have seen a reduction, while some longer tenures remain unchanged.
What Is MCLR and Why It Matters to Borrowers
MCLR (Marginal Cost of Funds Based Lending Rate) is the minimum interest rate below which banks are not allowed to lend.
Banks use MCLR as a benchmark to decide the interest rates on loans such as home loans, auto loans, and personal loans.
The RBI introduced the MCLR system in 2016 to make loan interest rates more transparent and responsive to changes in policy rates.
When MCLR goes down, borrowers usually benefit through lower loan interest rates, making loans more affordable.
What This Means for Customers
HDFC Bank’s MCLR cut is good news for borrowers, especially those with floating-rate loans. It can lead to reduced EMIs or faster loan repayment, depending on the loan terms.
Customers planning to take new loans may also benefit from slightly lower interest rates in the short-term loan categories.