Bank loan

Hdfc Bank Emi loan could rise as lender raises interest rates

By CNBCTV18.com IST (Released)

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A hike in the MCLR rate means higher interest on loans for new and existing borrowers, including EMIs for home loans, car loans and any other marginal cost loans.

HDFC Bank has increased its marginal cost of funds-based lending rate (MCLR) by 10 basis points (bps) effective today, i.e. September 7. (100 basis points = 1%). A hike in the MCLR rate means higher interest on loans for new and existing borrowers, including EMIs for home loans, car loans and any other marginal cost loans.

According to discounted rates, HDFC Bank’s one-year MCLR rose to 8.2%, while overnight MCLR jumped to 7.9%. The one-year MCLR is important in terms of retail lending since long-term loans such as home loans are tied to this rate.

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The MCLR for the one month, three month and six month terms will be 7.90%, 7.95% and 8.05%, respectively.

HDFC Bank also raised the marginal cost of funds-based lending rates by 5 to 10 basis points across different tenors last month.

MCLR was introduced in April 2016, with banks receiving a formula to calculate their cost of funding and then performing monthly assessments of their offerings over varying terms.

Each bank determines its MCLR by considering things like the additional cost of fund generation and operational expenses, among others.

Along with HDFC Bank, other banks are also increasing lending rates.