India’s largest private sector lender HDFC Bank has brought some relief to borrowers by reducing its Marginal Cost of Funds based Lending Rate (MCLR) by up to 0.05% (5 basis points). This move is expected to benefit thousands of customers whose home loans, personal loans and other retail loans are linked to MCLR.
The reduction comes at a time when many borrowers are hoping for lower EMIs after the Reserve Bank of India (RBI) reduced the repo rate from 5.50% to 5.25% in December 2025. Following the RBI’s policy move, several banks have started passing on the benefit to customers, and HDFC Bank’s latest step is part of that trend.
HDFC Bank has cut MCLR rates mainly for short-term tenures. The reduction applies to:
Overnight MCLR
1-month MCLR
3-month MCLR
These rates have been reduced by up to 5 basis points, while longer tenures like 6 months, 1 year, 2 years and 3 years remain unchanged.
After the revision, HDFC Bank’s MCLR range now stands between 8.25% and 8.55%, compared to the earlier range of 8.30% to 8.60%.
| Tenure | New MCLR |
|---|---|
| Overnight | 8.25% |
| 1 Month | 8.25% |
| 3 Months | 8.30% |
| 6 Months | 8.40% |
| 1 Year | 8.40% |
| 2 Years | 8.50% |
| 3 Years | 8.55% |
MCLR, or Marginal Cost of Funds based Lending Rate, is the minimum interest rate below which a bank cannot lend. Introduced by the RBI in 2016, MCLR was designed to make interest rates more transparent and ensure faster transmission of policy rate changes to customers.
If your loan is linked to MCLR, any change in MCLR directly impacts your interest rate – and in turn, your EMI.
The biggest question on every borrower’s mind is – will my EMI come down?
The answer depends on:
Whether your loan is linked to MCLR, RLLR (Repo Linked Lending Rate) or RBLR
Your reset date (the date when the bank revises your loan interest rate)
If your home loan is linked to overnight, 1-month or 3-month MCLR, you are more likely to see a reduction in your interest rate and EMI. However, if your loan is linked to the 1-year MCLR (which is the most common benchmark for home loans), the impact may be limited, as that rate has not been reduced.
A 0.05% cut may look small, but over a long tenure, it can lead to noticeable savings.
For example, on a home loan of ₹50 lakh for 20 years, even a slight reduction in interest rate can:
Lower your monthly EMI by a few hundred rupees
Reduce your total interest burden over time
While it may not be a massive drop, every reduction counts, especially for long-term borrowers.
The RBI’s decision to reduce the repo rate in December 2025 has encouraged banks to lower their lending rates. Lower inflation, improving liquidity and a push to boost credit growth are some of the reasons behind this trend.
HDFC Bank has now reduced MCLR for the second time after the RBI rate cut, showing its intent to pass on the benefit to customers.
Home loan borrowers with MCLR-linked loans
Personal loan and auto loan customers linked to short-term MCLR
Borrowers whose interest reset date is near
If your loan is linked to RLLR or RBLR, the benefit may already be visible since those rates move more directly with the repo rate.
If you are unsure about your loan benchmark, check your:
Loan agreement
Latest bank statement
Or contact your bank branch
Understanding whether your loan is MCLR-linked or repo-linked will help you know exactly how much benefit you can expect.
HDFC Bank’s MCLR reduction is a positive signal for borrowers and shows that banks are slowly passing on the benefit of RBI’s rate cuts. While the reduction is modest, it still brings some relief, especially for customers with short-term MCLR-linked loans.
For home loan borrowers, this move adds to the hope that bigger rate cuts may follow in the coming months if the RBI continues its accommodative stance.
