HDFC Bank Loan Interest: RBI Governor Sanjay Malhotra reduced the repo rate from 6.50% to 6.25%. It was expected that, following this announcement, loans would become cheaper. However, the country’s largest private bank quietly increased your loan EMI instead.

HDFC Bank Loan Interest: If you’re happy about the Reserve Bank’s decision to cut the repo rate and are hoping that your loan EMI will decrease as a result, this news might come as a shock. Despite the Reserve Bank’s repo rate cut, the country’s largest private sector bank has increased loan rates, which will directly affect your loan EMI.

RBI Governor Sanjay Malhotra announced a reduction in the repo rate from 6.50% to 6.25%. It was expected that this decision would lead to cheaper loans from banks. However, in response to this announcement, HDFC Bank, the largest private bank in the country, has quietly raised loan rates.

The bank has increased the Marginal Cost of Funds Based Lending Rate (MCLR) by 5 basis points for certain periods. Notably, this increase has only been applied to the overnight period. The MCLR, which was previously 9.15%, has been raised to 9.20%. The new interest rates have been effective from February 7, 2025.

Here are the new MCLR rates:

Overnight: MCLR increased from 9.15% to 9.20%

One month: MCLR remains at 9.20%

Three months: MCLR remains at 9.30%

Six months: MCLR remains at 9.40%

One year: MCLR remains at 9.40%

Periods above 2 years: MCLR remains at 9.45%

Periods above 3 years: MCLR remains at 9.50%


How MCLR is determined: Banks set the MCLR by considering various factors such as deposit rates, repo rates, operational costs, and the cost of maintaining the cash reserve ratio. When the repo rate changes, it affects the MCLR rates. An increase in the MCLR results in higher EMIs for existing loans like home loans, auto loans, and personal loans. Consequently, customers will have to pay more for their existing loans, and new loans will be offered at higher rates.