HDFC Bank, the country’s largest private sector lender, cut its marginal-cost based lending rate (MCLR) on loans for all tenors by 10 basis points (bps) (One basis point is equal to one-hundredth of one percent.). The rate cut will be effective from Friday, that is August 7, 2020, according to the bank’s website. Last month, too, HDFC Bank cut MCLR on loans across tenors by 20 bps.
According to the HDFC Bank website after the latest rate reduction, its overnight MCLR stands reduced to 7 per cent, while one-month MCLR has decreased to 7.05 per cent. One-year MCLR, to which many of the consumer loans are linked, will now be 7.35 per cent, while three-year MCLR has been set at 7.55 per cent. Banks generally review their MCLR every month.
HDFC Bank’s tenor-wise MCLRs effective from August 7, 2020 are:
|Tenor wise MCLR in||MCLR (August 2020 in %)||MCLR (July 2020 in %)|
Source: HDFC Bank website
The move by HDFC Bank comes just a day after the Reserve Bank of India (RBI) announced its decision to keep key rates (i.e., repo and reverse repo rates) unchanged.
Other than HDFC Bank, few other lenders, too, have announced reduction in MCLR. On Thursday, almost immediately after the RBI’s monetary policy announcement, PSU lender, Canara Bank announced that it has slashed MCLR by up to 30 basis points across various tenors. The overnight and one-month lending rates have been cut by 20 basis points (bps) to 7 per cent each. The three-month MCLR has been revised to 7.15 per cent from 7.45 per cent, Canara Bank said in a regulatory filing. The six-month MCLR has been cut to 7.40 per cent from 7.50 per cent, the bank said. The one-year MCLR has been revised to 7.45 per cent from 7.55 per cent earlier. The revised lending rates will be effective from August 7, Canara Bank said.