HDFC Bank Slashes MCLR Rates After RBI Repo Cut—Big Relief for Loan Borrowers

In a major move that brings relief to loan borrowers, HDFC Bank has announced a significant reduction in its Marginal Cost of Funds-Based Lending Rate (MCLR). This step comes in the wake of the Reserve Bank of India's (RBI) recent cut in the repo rate, signaling a broader trend of easing interest rates across the banking sector.

HDFC Bank Cuts MCLR by Up to 35 Basis Points

Effective from July 7, 2025, HDFC Bank has reduced its MCLR by up to 35 basis points (bps) across various loan tenures. This reduction means that customers with loans linked to MCLR will now enjoy lower interest rates, translating to reduced monthly EMIs and overall borrowing costs.

Earlier, the bank’s MCLR ranged between 8.90% to 9.10%. With the latest revision, the new MCLR stands at 8.60% to 8.80%, depending on the loan tenure.

Revised MCLR Rates by Tenure

Here’s how the MCLR has been revised across different loan periods:

• Overnight and 1-Month Loans: Reduced from 8.90% to 8.60% (30 bps cut)

• 3-Month Loans: Reduced from 8.95% to 8.75% (20 bps cut)

• 6-Month and 1-Year Loans: Reduced from 9.05% to 8.75% (30 bps cut)

• 2-Year Loans: Reduced from 9.10% to 8.75% (35 bps cut)

• 3-Year Loans: Revised down to 8.80% (30 bps cut)

These changes are expected to benefit a large segment of customers, particularly those who have home, auto, or personal loans linked to MCLR.

What is MCLR and Why It Matters?

MCLR, introduced by the RBI in 2016, is the minimum interest rate below which a bank cannot lend, except in some special cases. It is calculated based on the bank’s marginal cost of funds, operational expenses, and the tenure premium.

Any borrower whose loan is tied to the MCLR system will directly benefit from this reduction, as the cost of borrowing drops in line with the new rates.

Home Loans Likely to Become Cheaper

While home loan rates are typically linked to the RBI’s repo rate, the broader impact of falling MCLR will likely spill over into floating rate loan products as well. According to HDFC Bank’s website, as of July 7, 2025, home loan interest rates for salaried and self-employed borrowers range from 8.50% to 9.40%, with some special offers starting from as low as 7.90%.

These rates are benchmarked against the current repo rate of 5.50%, and any further policy easing by the RBI could push rates even lower, making this a good time for prospective home buyers to take the plunge.

RBI’s Policy Action Fuels Rate Cut

The latest rate cut by HDFC Bank aligns with the RBI’s policy direction. Since February 2025, the RBI has reduced the repo rate by a total of 100 basis points, including a 50 bps cut in June 2025, which marked the third consecutive reduction.

This aggressive monetary easing is aimed at stimulating borrowing and investment amidst slowing economic momentum. As banks start passing on the benefits of lower policy rates, consumers stand to gain in the form of cheaper loans and better financial flexibility.

Who Should Take Advantage?

If you're planning to take a home loan, personal loan, or business loan, this could be an ideal time to lock in lower rates. Existing borrowers under the MCLR regime can also expect reduced EMIs after the rate reset in their loan cycle.

However, it’s important to verify with your bank whether your loan is MCLR-linked or based on an external benchmark like the repo rate, as the impact will differ accordingly.

Final Word

With this proactive rate revision, HDFC Bank joins the list of lenders easing borrowing costs in response to the RBI's dovish stance. The move will offer substantial savings to borrowers and potentially boost credit demand across sectors.