HDFC bank hikes MCLR by 35 bps across all tenures effective June 7

Country’s largest private sector lender, HDFC Bank, has hiked its marginal cost of funds based lending rate (MCLR) by 35 basis points across all tenures, effective June 7. HDFC Bank has hiked its MCLR by 60 basis points since the Monetary Policy Committee (MPC) hiked the benchmark policy rate by 40 basis points in early May. It had hiked MCLR by 25 basis points soon after the MPC hiked the repo rate in an off-cycle meeting.

This 35 basis points hike in MCLR by HDFC Bank comes a day ahead of the scheduled meeting of the MPC where the 6-member committee is most likely to raise rates again. A poll of economists conducted by Business Standard expects the MPC to hike the repo rate by 50 basis points again. Six of the 10 polled economists expect a hike of 50 basis points (bps), while the remainder said it could be between 35-40 bps.
 

According to HDFC Bank’s website, the overnight MCLR stands at 7.50 per cent; the one-month and three month MCLR stand at 7.55 per cent and 7.60 per cent, respectively; six month MCLR is at 7.70 per cent; the 1-year MCLR, 2-year MCLR, and 3-year MCLR stand at 7.85 per cent, 7.95 per cent, and 8.05 per cent.

As of December 2021, a little over 39 per cent of banking system loans are linked to the external benchmark, shows Reserve Bank of India (RBI) data. Around 58.2 per cent of the home loans are linked to external benchmarks. And, 53 per cent of loans of the banking system are linked to the MCLR.

Last week, many other lenders, including HDFC Ltd, ICICI Bank, Punjab National Bank, and Bank of India also hiked their MCLR.

HDFC raised interest rates on its home loans by 5 basis points from June 1. It had raised rates by 30 basis points last month, post the hike in repo rate. The country’s second largest private sector bank, ICICI Bank, has increased its MCLR by 30 basis points from June 1. Punjab National Bank also increased its MCLR by 15 basis points, effective June 1. Bank of India also increased its MCLR on some tenors, effective June 1.