HDFC Bank (file photo)
The country's largest private bank, HDFC Bank, has taken a big decision. If you are a customer of HDFC Bank. Actually, the bank has made important changes in its lending rates, which is going to have a direct impact on your monthly EMI. HDFC Bank has increased the Marginal Cost of Funds Based Lending Rate (MCLR) by 0.05 percent for long-term loans, especially three-year loans. 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, now the three-year MCLR has increased from 8.55% to 8.60%.
Big relief to short-term borrowers
On one hand, the bank has given a shock to long-term borrowers, while on the other hand, it has also given great relief to those taking small and short-term loans. The bank has reduced the MCLR from overnight to six months by 0.05 percent. This decision will directly benefit those companies and businessmen who take short-term loans for working capital or expansion of their business. After this change, the one month rate has reduced from 8.10% to 8.05%. Similarly, the rate for three months has come to 8.15% and MCLR for six months has now come to 8.30%.
No change in rates for 1-2 years
In this entire exercise, the bank has not made any change in the MCLR for one and two year period. For customers, the one year rate remains constant at 8.35% and the two year rate remains at 8.45%. After these latest changes, the overall MCLR rates of the bank now range from 8.05% to 8.60%.
What is MCLR?
Often the technical language of banking is beyond the understanding of the common man. If we understand in simple words, MCLR is the minimum interest rate below which no bank can give loans to its customers. The Reserve Bank of India (RBI) had implemented it in the year 2016 so that the customers could get the benefit of the changes in interest rates in a fair and transparent manner. Banks decide this keeping in mind the cost of raising funds from the market, their operating expenses and other financial parameters. This is the reason why this rate is also fixed differently for different periods, so that the balance of both the market and the customers is maintained.
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