HDFC Bank increased its marginal cost-based lending rate (MCLR) by 25 basis points across all tenors. The hike on all tenors went into effect on May 7. The lender is among a list of banks that have recently increased their lending rates. The Reserve Bank of India also decided to raise its repo rate by 40 basis points to 4.40%.
The increase in the MCLR means that the cost of home, personal and auto loans will increase.
With the latest increase, its overnight MCLR stands at 7.15%, while the rate for one-month, three-month and six-month terms increases to 7.20%, 7.30% and 7.35%, respectively.
HDFC Bank’s one-year MCLR rose to 7.50%, while the two- and three-year maturities rose to 7.60% and 7.70%.
The increase comes after State Bank of India, Kotak Mahindra Bank, Bank of Baroda and Axis Bank hiked their MCLR rates. State-owned lender State Bank of India (SBI) raised the MCLR by 10 basis points (bps) across all maturities. Kotak Mahindra Bank also increased the MCLR across the board. BOB and Axis bank increased their MCLR by 5 basis points.
In addition, the Indian central bank on Wednesday raised its key rate or repo rate by 40 basis points to 4.40%. It also increased the CRR or cash reserve ratio by 50 basis points to 4.5% from May 21. Repo rates refer to the rate at which commercial banks borrow money from the central bank – in India’s case, the RBI – to maintain liquidity. This is one of the most important ways to control inflation.
Also read: SBI raises MCLR by 10 basis points; home and auto loans to be impacted
Also Read: Why Rates Are Rising Globally and What It Means