The Marginal Cost of the Fund-Based Lending Rate or the MCLR is the minimum interest rate a financial institution needs to charge for a specific loan. It dictates the lower limit of the interest rate for a loan. This rate limit is set in stone for borrowers unless specified otherwise by the Reserve Bank of India.
As of December 7, 2023, the revised rates for overnight MCLR stand at 8.70 per cent; 8.75 per cent for one month cent; 8.95 per cent for three months, and 9.15 per cent for six months.
Source: HDFC Bank website
The one-year MCLR remain unchanged at 9.20 per cent, and these latest rates will take immediate effect.
However, since October 2019, banks have been mandated to link their retail floating rates to an external benchmark, such as the repo rate, ensuring better transmission of policy rate changes. Borrowers have the option to refinance MCLR-linked loans to repo-linked loans for potentially more transparent and efficiently priced interest rates.
Notably, in its last four bi-monthly monetary policy meetings, the Reserve Bank of India (RBI) kept the repo rate unchanged. The central bank’s last repo rate hike occurred in February, when the rate was raised to 6.5 per cent.
For FDs exceeding Rs 100 crore to Rs 500 crore, the interest now stands at 7.30 per cent from 7.35 per cent earlier. The revised rates will be effective from December 8, 2023.
Source: HDFC Bank website
First Published: Dec 08 2023 | 09:34 AM IST