The country’s largest private sector lender, HDFC bank has not cut the marginal-cost based lending rate (MCLR) on loans for all tenors this month.

The rates remain unchanged for the month of January as compared to last month. In December, the bank reduced its MCLR on all tenors by up to 15 basis points (bps).

According to the bank’s website, the latest interest rate will be effective from January 7, 2020. All MCLR rates stands unchanged. 6-month MCLR stands at 8 bps, 1-year at 8.15 percent, 2-year at 8.25 percent and the 3-year rate at 8.35 percent.

Despite the fact that the second largest private sector lender, ICICI bank, has reduced the rates by 5 bps across all tenors and Bank of Maharashtra has also reduced rates by up to 45 bps in January, HDFC bank MCLR for one-year tenor still remains lower. Generally, borrowers opt for one-year MCLR.

ICICI bank has reduced its MCLR for the month of January by 5 bps across all tenors. The bank has reduced its one-year MCLR to 8.20 percent from 8.25 percent earlier. Overnight rate has been reduced to 7.95 percent from 8 percent. The one-month, three-month and six-month MCLR rates now stand at 7.95 percent and 8 percent 8.15 percent, respectively.

On the other hand, state-owned Bank of Maharashtra has reduced its MCLR by up to 45 bps across various tenors, effective from January 7, 2020. The bank has reduced its one-year MCLR to 8.25 percent from 8.40 percent earlier. Overnight rate has been reduced to 7.60 percent from 8.05 percent. The one-month, three-month and six-month MCLR rates now stand at 7.70 percent and 7.75 percent 7.90 percent, respectively.

Tenor-wise MCLRs effective from January for HDFC Bank, ICICI Bank and Bank of Maharashtra as follows:

Tenor wise MCLR MCLR (January 2020 in %) HDFC Bank MCLR (January 2020 in %) Bank of Maharashtra MCLR (January 2020 in %) ICICI Bank
Overnight 7.8 7.6 7.95
1 month 7.85 7.7 7.95
3 month 7.9 7.75 8
6 month 8 7.9 8.15
1 year 8.15 8.25 8.2
Base Rate 8.85 9.40 8.85

Source: HDFC Bank, ICICI Bank, Bank of Maharashtra websites

On a cumulative basis, the RBI has cut repo rate by 135 bps from February to October last year (2019). The full impact on lending rates is still playing out — until now, it is 44 bps with regard to new loans. Following suit, banks too, have been cutting the interest rate on loans albeit not at the same rate. Where banks like ICICI Bank, Bank of Maharastra have reduced MCLR in some of their tenors this month, HDFC bank’s MCLR for tenors remained unchanged for this month.

However, to make the rate transmission happen faster, RBI had already mandated banks to move from the MCLR regime to externally benchmark all their floating-rate loans. Most public sector banks like SBI, Central Bank of India and so on have started offering loans linked to an external benchmark. However, private sector lenders like HDFC Bank are yet to move to the new regime.





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