After the Reserve Bank of India (RBI) raised policy rates by 25 basis points on Wednesday, HDFC Bank has increased its Marginal Cost of Lending Rate (MCLR) by 10 basis points across different tenures. The new rates are effective from June 7, 2018. The bank will now charge 8.40 per cent for one year. For two and three year loans, MCLR is now at 8.55 per cent and 8.70 per cent.Also Read - RBI Slaps Penalty Of Rs 1 Crore On SBI For Irregularities In Regulatory Compliance
With an increase in MCLR, home loans and auto loans are also likely to go up. Consider this: if you have a home loan of Rs 50 lakh for a period of 20 years, then your home loan EMI will go up by Rs 300 per month at Rs 43,075 from the earlier EMI of Rs 42,760. Also Read - Massive Jump! India's GDP Likely to Grow 8.1 Per Cent in Q2 FY22, Says SBI Report
Effective Date: June 7, 2018
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|Tenor||MCLR in %|
On Wednesday, the Reserve Bank of India, after a gap of over four years, increased the repo rate by 25 basis point to 6.25 per cent. It was expected that increase in the key policy rate will lead to a rise in lending costs of banks.
Recently, State Bank of India (SBI), also increased its MCLR rate by 10 basis points. For the period of one-year, SBI MCLR is now at 8.25 per cent. For two -year period, the MCLR rate is now 8.35 per cent against the rate of 8.25 per cent
Banks offer a set of five MCLR rates ranging from overnight, one month, three months, six months to one year. Banks have to declare these rates every month, but the revised rates on home loans are applicable after the end of the reset period.
MCLR takes into account incremental cost of funds unlike the base rate, which was calculated on the basis of the average cost of funds. From April 1, 2018, onwards all home loans are linked with MCLR and old loans are no more linked with the base rate method.