Mumbai – : In a surprising move, HDFC Bank, the largest private bank in the country, has recently announced an increase in its Marginal Cost of Funds based Lending Rates (MCLR). This development has significant implications for HDFC customers who have availed loans from the bank, as it directly translates into higher interest rates on their loans. Effective from 7th June 2023, the revised MCLR rates have left customers facing the prospect of paying more than before. In this article, we will delve into the details of the MCLR increase and its potential impact on various loan categories.

Understanding the MCLR Increase

The MCLR is the minimum interest rate below which a bank is not permitted to lend funds. HDFC Bank has adjusted its MCLR across different tenors, resulting in varied increases in interest rates for customers. Let’s explore the revised rates:

1. Overnight MCLR

The overnight MCLR, which reflects the interest rate for loans with a maturity of one day, has been increased by 15 basis points to 8.10%. This adjustment implies that short-term borrowers will experience a slightly higher interest burden.

2. One-Month MCLR

For borrowers seeking loans with a one-month tenure, HDFC Bank has raised the MCLR by 10 basis points, reaching 8.20%. This change necessitates a higher interest payment for loans falling into this category.

3. Three-Month MCLR

Customers availing loans with a three-month tenure will face an increase of 10 basis points, raising the MCLR to 8.50%. The higher interest rate applied to this category may impact borrowers planning for mid-term loan commitments.

4. Six-Month MCLR

HDFC Bank has slightly raised the six-month MCLR by 5 basis points, resulting in a new rate of 8.85%. While the increase is relatively modest, it adds to the overall cost for borrowers with loans extending over this timeframe.

5. One-Year and Beyond

No changes have been implemented in the MCLR rates for tenors above one year. Borrowers with long-term loans will not experience any immediate impact due to this MCLR adjustment.

Loan Categories Affected

It’s important to note that the increase in MCLR by HDFC Bank primarily affects customers taking personal loans and auto loans. Home loan customers, however, remain unaffected by this recent adjustment in interest rates. This distinction ensures that individuals seeking housing loans from HDFC Bank can breathe a sigh of relief as their loan terms and repayments will not be subject to the MCLR increase.

Potential Ripple Effects in the Banking Sector

While HDFC Bank has taken the initiative to revise its MCLR rates, it is crucial to highlight that other prominent banks may follow suit in the near future. Banks such as ICICI Bank, Bank of India, and PNB might also consider raising their MCLR rates to align with the prevailing market conditions. This potential domino effect could result in a collective increase in lending rates across the banking sector, impacting borrowers beyond HDFC Bank’s customer base.


In conclusion, HDFC Bank’s decision to raise its Marginal Cost of Funds based Lending Rates (MCLR) has introduced new challenges for borrowers in the form of increased interest rates. Customers availing personal loans and auto loans will be directly affected by this development, while those with home loans need not be concerned. It is imperative for borrowers to assess their financial situation and plan accordingly in light of these revised MCLR rates. Additionally, staying informed about potential rate adjustments by other banks can help borrowers make informed decisions about their loan commitments.

Remember, in the ever-evolving landscape of banking, keeping a close eye on interest rate fluctuations and exploring alternative financing options can empower individuals to navigate the financial terrain more effectively.


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