HDFC Bank hikes interest rates; EMIs to get costlier

People who have opted for a loan from HDFC Bank will have to pay more on their EMIs. The private sector lender has hiked the marginal cost of fund-based lending rates (MCLR). The rates, which came into effect from 7 November 2022, have been hiked across various tenors. According to the official HDFC Bank website, the overnight MCLR has been hiked from 7.90 percent to 8.20 percent. The MCLR for one month tenor has been increased to 8.25 percent. Furthermore, the private sector lender has also revised the MCLR on three months tenor to 8.30 percent.Furthermore, the MCLR on 6 months tenor has been raised to 8.40 percent by HDFC Bank. The private sector bank has raised the MCLR for one year to 8.55 percent. The rate for two and three years tenor has been hiked to 8.65 percent and e 8.75 percent, respectively.What is the importance of MCLR?MCLR is the minimum rate at which banks lend to customers. If lenders offer loans below the MCLR, they face severe action. It is only in exceptional circumstances and after taking the approval of the central bank, that lenders can give out a loan below the prevailing MCLR. To know the MCLR of any bank, you can visit their website.According to the Reserve Bank of India’s guidelines, lenders need to announce their MCLR for various tenures each month. As a result of a hike in the MCLR by HDFC Bank, housing, automobile and personal loans will become more expensive for new borrowers. For existing borrowers, their EMI will be revised at the reset date of their loans.After the RBI’s decision in 2016 to replace the base rate system with MCLR for calculating interest in 2016, all lenders have been using MCLR as the basis for computing loan interest rates. The recent repo rate hike by the RBI has prompted several banks to increase their marginal cost of lending rate.Read all the Latest News, Trending News, Cricket News, Bollywood News,India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.