Bank’s MCLR now stands in the 9.10-9.35% range. One-year MCLR, which is often used for pricing corporate loans, has come down to 9.30% from 9.40%, which indicates that the bank’s cost of fund has come down in the last two months -since the time RBI announced first policy rate cut in five years.
HDFC Bank’s move comes two days before the Reserve Bank of India is scheduled to announce its monetary policy. The central bank is widely expected to cut the repo rate by 25 bps on Wednesday to 6.00%.
The central bank had last cut the rate on February 7, 2025. On the same day, HDFC Bank had hiked MCLR by 5 bps on overnight tenure.
Last week, HDFC Bank had ended its special deposit scheme, under which it offered 7.35% for 35-month retail deposits and 7.40% on 55-month deposits. It is now offering 7% on these two tenures.
The transmission of regulatory rate cuts happens quickly in case of repo-linked benchmark rate. However, there is lag for MCLR-linked loans, where the transmission depends on banks’ costs.
