HDFC Bank has slashed its Marginal Cost of Funds-based Lending Rates (MCLR) by 5 to 10 basis points across various tenures, potentially lowering the interest burden for millions of borrowers.
- HDFC Bank's revised MCLR rates now range from 7.90% to 8.60%.
- Overnight and 1-month MCLR have been reduced to 7.90% from 8%.
- The revision is effective from September 7, 2026, impacting MCLR-linked loans.
In a strategic move to adjust its lending profile, HDFC Bank has announced a reduction in its Marginal Cost of Funds-based Lending Rates (MCLR) by up to 10 basis points (bps) on selected tenures. This revision, which came into effect on September 7, 2026, is expected to provide financial relief to a specific segment of borrowers whose loans are pegged to the MCLR regime.
A basis point represents one-hundredth of a percentage point. Under the new structure, the bank's MCLR spectrum has shifted from 8%–8.65% down to 7.90%–8.60%. Specifically, the overnight and 1-month MCLR have both been cut to 7.90%. The 3-month tenure saw a drop to 8.05% (from 8.15%), and the 6-month rate now stands at 8.25% (from 8.30%). Long-term borrowers will also see a dip, with the 3-year MCLR reducing to 8.60%.
Why This Matters
BozokMedia analysis shows that this rate cut is likely a response to fluctuating liquidity conditions and a push to stimulate credit growth. By lowering the benchmark, HDFC Bank is positioning itself to attract high-quality borrowers in a competitive lending environment. However, the transmission of these rates to the end consumer is not instantaneous, creating a lag between the announcement and the actual EMI reduction.
| Tenure | Previous Rate (%) | New Rate (%) |
|---|---|---|
| Overnight / 1 Month | 8.00% | 7.90% |
| 3 Month | 8.15% | 8.05% |
| 1 Year | 8.40% | 8.35% |
| 3 Year | 8.65% | 8.60% |
"The real benefit of an MCLR cut is realized only at the reset date of the loan; borrowers on External Benchmark Linked Rates (EBLR) will see no change from this specific move."
Understanding MCLR: The Marginal Cost of Funds-based Lending Rate (MCLR) is the minimum interest rate a bank can charge on loans linked to this benchmark. Introduced by the Reserve Bank of India (RBI) in 2016, it is calculated based on the bank's cost of deposits, operating costs, and a required profit margin.
For existing borrowers, it is crucial to note that EMIs will not drop immediately. The actual impact depends on the loan agreement's reset frequency and the specific spread charged by the bank. Furthermore, for those seeking new loans, the final interest rate will still be subject to the borrower's credit score and the specific loan product chosen.
Frequently Asked Questions
Q1: Will my EMI decrease immediately after this announcement?
No, the reduction will only apply when your loan's interest rate is reset, as per the terms of your loan agreement.
Q2: Does this rate cut affect Fixed Deposit (FD) interest rates?
No, MCLR pertains to lending rates. FD rates are determined separately and are not automatically affected by changes in the MCLR.