HDFC Bank, the largest private bank in the country, has recently announced an increase in its interest rates, making loans costlier for borrowers. As a result, borrowers will experience a rise in their Equated Monthly Installments (EMIs). The new rates came into effect from July 7, 2023.
When we look at the details of HDFC Bank's Marginal Cost of Lending Rates (MCLR) hike, the overnight MCLR has been raised by 15 basis points to 8.25 percent, previously standing at 8.10 percent. The one-month MCLR has increased from 8.20 percent to 8.30 percent, reflecting a rise of 10 basis points. Similarly, the three-month rate has been raised by 10 basis points to 8.60 percent, while the six-month rate has seen a 5 basis point increase to 8.90 percent. However, there has been no change in the MCLR for tenures exceeding one year, which currently stands at 9.05 percent. It's important to note that most consumer loans offered by HDFC Bank are linked to this one-year MCLR.
It's worth mentioning that HDFC Bank's decision to increase MCLR will not impact home loan interest rates, as those are linked to the repo rate. Only existing personal loans and floating auto loans, which are based on MCLR, will be affected by the interest rate change.
The decision by HDFC Bank to raise MCLR has surprised some experts, as the Reserve Bank of India (RBI) has not made any changes to the policy rates in the past two Monetary Policy Committee meetings. Furthermore, experts believe that the policy rates may remain unchanged in the upcoming August policy meeting as well.
This month holds particular significance for HDFC Bank, as the housing finance company HDFC has been merged with HDFC Bank since July 1, 2023. Trading of HDFC shares will cease on the stock exchange starting from July 13.
Please note that this increase in interest rates by HDFC Bank may have implications for borrowers with certain types of loans, and it is advisable to contact the bank or seek professional advice for personalized guidance on how this change may affect you.
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