New Delhi: Borrowing a loan from HDFC Bank just got expensive. People wanting to take a loan from the bank might reconsider their choice after knowing that India’s biggest private lender has hiked its interest rates.
The bank has increased the interest rates up to 15 basis points i.e. 0.15 per cent. It is clearly mentioned on the bank’s website that the new interest rates have come into effect from August 7, 2023. This, in turn, affects directly the EMI costs as individuals will have to pay more interest on their EMIs.
MCLR- Marginal Cost of Funds based Lending Rate is the lowest level of lending rate beneath which no bank is allowed to give loans.
The bank has also escalated its MCLR rate overnight by 10 basis points, which is 0.10 per cent. Post to that, the interest rates climbed from 8.25 per cent to 8.35 per cent. MCLR for one month took a jump of 15 basis points, resulting surge in interest rate to 8.45 per cent from 8.30 per cent. Likewise, MCLR for three months was expanded by 10 basis points, causing interest rates to go up from 8.70 per cent to 8.60 per cent.
In addition to this, HDFC bank’s interest rate was influenced by the 6-month MCLR, which went up by 5 basis points causing interest rates to climb to 8.95 per cent. At present, the MCLR for one year is 9.10 per cent, however, there is no change in the MCLR for a period of more than one year.
On the other hand, The bank’s interest rate for two years now stands at 9.15 per cent, whereas it increased to 9.20 per cent for the period of three years.
How does the MCLR affect you?
MCLR (Marginal Cost of Funds Based Lending Rate) is the minimum interest rate beyond which a bank is not permitted to provide loans. These are the interest costs affecting directly the EMIs. A jump in the MCLR rate will make the interest rates on EMI go up, making EMIs costly for its old customers as well as new customers.
MCLR impacts the loans which are taken on floating interest rates and not on fixed interest rates.
It is necessary for banks to declare their MCLR every month of several categories, such as for overnight, one month, three months, six months, one year and two years.
(Written By- Mahek Nigam)