India’s largest private sector lender HDFC Bank has raised its marginal cost of funds-based lending rate (MCLR) with effect from December 7, 2022, thus allowing home, vehicle and personal loan Dear Its overnight MCLR has increased to 8.30 per cent from 8.20 per cent earlier. The bank’s one-month MCLR has been increased by 5 basis points from 8.25 per cent to 8.30 per cent, while its three-month and six-month MCLR are uncapped at 8.35 per cent and 8.45 per cent, respectively.
According to HDFC Bank’s website, its benchmark one-year MCLR is now 8.60 per cent, two-year MCLR has increased to 8.70 per cent and three-year MCLR has increased to 8.80 per cent from 8.75 per cent.
The RBI replaced the base rate system for determining interest rates with the MCLR system on April 1, 2016. While the borrowers who were issued loans prior to April 1, 2016 are still under the old Base Rate and Benchmark Prime Lending Rate (BPLR) regime. They can opt to move to the MCLR rate if they feel it is beneficial.
In the last one month, various banks including Bank of India, PNB and ICIC Bank have increased their interest rates on loans.
State-owned Punjab National Bank (PNB) hiked MCLR by 5 basis points (bps) across all tenors. One hundred basis points is equal to one percentage point. With the latest hike, its benchmark one-year MCLR now stands at 8.10 per cent, from 8.05 per cent earlier. Its six-month MCLR has now increased from 7.75 per cent to 7.80 per cent.
ICICI Bank has also increased its MCLR by up to 10 basis points for all tenors. Its overnight and one month MCLR has been increased from 8.05 per cent to 8.15 per cent now. Its six-month and one-year MCLR have also been increased by 10 bps each to 8.35 per cent and 8.40 per cent, respectively. Its three-month MCLR has been increased from 8.25 per cent to 8.35 per cent.
In the fifth consecutive hike this year, the RBI’s monetary policy committee on Wednesday raised the repo rate by 35 basis points (bps) to 6.25 per cent with immediate effect, making loans costlier. The policy rate is now at the highest level since August 2018. RBI has maintained the policy stance on ‘withdrawal of accommodation’.
RBI has retained its inflation forecast for the current financial year 2022-23 at 6.7 per cent. The RBI is expected to bring down CPI inflation to 5 per cent and 5.4 per cent in Q1 FY24 and Q2 FY24 respectively.
The central bank has cut FY23 GDP growth forecast to 6.8 per cent from 7 per cent earlier.
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