The Housing Development Finance Corporation (HDFC) bank has slashed its Marginal Cost based lending rate (MCLR) for loan of two and three years tenor by 5 basis points. Taking the MCLR for both the tenor to 8.85% and 9% from the previous 8.9% and 9.05% respectively.
The cut in MCLR is due to the rate cut by Reserve Bank of India (RBI) in the month of February, when RBI slashed the key lending rate by 25 basis points, pegging the repo rate at 6.25%.
The rate cut by HDFC Bank was expected and is going to bring interest rate for loans down. Adhil Shetty, CEO, Bankbazaar.com commented on the rate cut by HDFC “So far we’ve seen only 5 to 10 basis points being passed on to customers. HDFC Bank has reduced its 2-year and 3-year MCLR by 5 basis points. This would impact only those deposits and lending products bench-marked to those tenors. HDFC Bank’s home loans are bench-marked against the retail prime lending rate (RPLR).”
However, the private lender has kept the other MCLR rates intact with rates for overnight, one month, three months, six months and 1-year tenor loans at 8.35%, 8.4%, 8.45%, 8.55% and 8.75% respectively.
Since the bi-monthly MPC meeting of the central bank in February many lenders including State Bank of India (SBI), Bank of Baroda and Punjab National Bank (PNB) also announced rate cuts in lending rates.
Earlier, a day after rate cut by RBI in its bi-monthly policy, SBI also slashed its key lending rate by 25 basis points passing on the rate cut benefits to the borrower. In a similar way, on 5th March, the state owned Bank of Baroda slashed the lending rate by 10 basis points. The rate cut would enable the borrowers to take loan at lower interest rate, making home and auto loans cheaper for the next one year.