HDFC Bank Hikes Lending Rates; Home Loan, Personal Loan, Auto Loan To Get Costlier

HDFC Bank, India’s largest private sector lender, has hiked its marginal cost of funds-based lending rates (MCLR) by 5-15 basis points (bps) across tenure, effective May 8, 2023. According to HDFC Bank’s website, its benchmark one-year MCLR, which is linked with key loans like home loan, auto loan and personal loan, has been hiked to 9.05 per cent.

The bank’s overnight MCLR now stands at 7.95 per cent. Its one-month MCLR has been hiked to 8.10 per cent, while its three-month MCLR now stands at 8.40 per cent. The lender’s six-month MCLR is now at 8.80 per cent, apart from two-year and three-year MCLRs at 9.10 per cent and 9.20 per cent, respectively.

HDFC Bank’s latest MCLR (Effective May 8, 2023):

Overnight: 7.95 per cent

1-Month: 8.10 per cent

3-Month: 8.40 per cent

6-Month: 8.80 per cent

1-Year: 9.05 per cent

2-Year: 9.10 per cent

3-Year: 9.20 per cent.

HDFC Bank and HDFC announced a $40 billion merger, the largest in Indian corporate history, last April and are awaiting the final regulatory go-ahead for the same. In pursuit of the same scheme, HDFC Bank sought relaxations on certain regulatory requirements from the regulator.

Recently, HDFC Bank said the RBI refused to make any exceptions on cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements as sought by it ahead of the merger of mortgage financier parent HDFC with itself. The central bank has, however, allowed some leeways on the priority sector lending front, the city-headquartered bank said in a letter to the exchanges.

CRR is the percentage of deposits that a commercial bank like HDFC Bank has to park with the central bank for which it does not earn any interest, while SLR is a percentage of deposits which are mandated to be invested in government securities. A non-bank lender is exempt from the same requirements and HDFC Bank had sought leeways on compliance.

In the last monetary policy review in April 2023, in a surprising move, the RBI decided to keep the repo rate unchanged at 6.50 per cent after hiking by 250 basis points continuously since May 2022. It also revised downwards India’s FY24 inflation projection to 5.2 per cent from 5.3 per cent estimated earlier, and raised FY24 GDP growth forecast to 6.5 per cent from 6.4 per cent earlier.

The reverse repo rate and CRR also remained unchanged at 3.35 per cent and 4.5 per cent, respectively. The RBI also kept the SDF unchanged at 6.25 per cent, and MSF and Bank Rates maintained at 6.75 per cent. The SDF is the lower band of the interest rate corridor, while the MSF is the upper band.

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