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HDFC Bank, the country’s largest private bank, has made its loan costlier even before the RBI’s bi-monthly monetary review meeting begins. HDFC Bank has announced an increase of up to 15 basis points in the benchmark marginal cost of funds-based lending rates ie MCLR. The new interest rates of the bank are effective from August 7, 2023. With the increase in MCLR, all types of bank loans will become costlier. EMI of old customers of the bank will also be affected.

New MCLR
The bank has increased its overnight MCLR rate by 10 basis points. The MCLR rate for one night has increased from 8.25 per cent to 8.35 per cent. The one-month MCLR has been increased by 15 basis points. The one-month MCLR has increased from 8.30 per cent to 8.45 per cent. The three-month MCLR has increased by 10 basis points from 8.60 per cent to 8.70 per cent. The six-month MCLR has been increased by only 5 basis points. The six-month MCLR has increased from 8.90 per cent to 8.95 per cent. However, the bank has not made any change in the MCLR for a long period of more than one year.

Higher EMIs 
HDFC Bank has also increased the one-year MCLR from 9.05 per cent to 9.10 per cent now. Most consumer loans are linked to the one-year MCLR. The interest rate for home loan, car loan and personal loan is decided on the basis of one year MCLR only. The increase in one-year MCLR means that home, car and personal loan customers will now have to pay higher interest.

What is MCLR?
According to HDFC Bank Banksite, the Marginal Cost of Funds-Based Lending Rate or MCLR is the minimum interest rate below which no financial institution can lend to customers. MCLR sets the lower limit of the interest rate for a loan.

Other HDFC Rates
HDFC Bank’s revised base rate is 9.20 per cent and has been in effect from June 16, 2023. The bank’s benchmark PLR is 17.70 per cent per annum, which is effective from June 16, 2023.

Monetary policy on August 10
The bi-monthly monetary policy review meeting of the central bank is starting from August 8, 2023. Governor Shaktikanta Das will announce the results of the meeting on August 10. In the last two meetings, RBI has kept the repo rate unchanged at 6.5 percent. This time, amidst rising inflation, experts are divided regarding the change in the repo rate.

Interest rate may remain stable
Swaroop Kumar, managing director of Punjab and Sind Bank, says that the RBI takes into account many things including global trends. Therefore, looking at the overall situation, I anticipate that the RBI will keep the repo rate unchanged at the current level. If the global situation remains stable then the interest rate is likely to remain status quo for the next 2-3 quarters.