HDFC Bank cuts short-term MCLR ahead of RBI policy; long-term rates unchanged

Private sector lender HDFC Bank has revised its Marginal Cost of Funds-based Lending Rate (MCLR) on select short-term tenors, just a day before the Reserve Bank of India’s (RBI) monetary policy announcement. The revised rates came into effect from April 7, 2026.

The bank has reduced its overnight and one-month MCLR from 8.15% to 8.10%, while the three-month MCLR has been cut from 8.25% to 8.20%. However, medium- and long-term lending rates remain unchanged, indicating a cautious approach amid uncertain macroeconomic conditions.

Revised MCLR structure

Under the latest revision, HDFC Bank’s MCLR stands at:

Overnight: 8.10% 1 Month: 8.10% 3 Month: 8.20% 6 Month: 8.35% 1 Year: 8.35% 2 Year: 8.45% 3 Year: 8.55%

What this means for borrowers

MCLR is the minimum rate below which banks cannot lend and is used to price various loans, including home, personal, and business loans. A reduction in short-term MCLR can benefit borrowers with shorter reset cycles, potentially lowering EMIs marginally.

However, since the widely used one-year MCLR remains unchanged at 8.35%, the impact on most home loan borrowers is expected to be limited.

HDFC home loan rates vs peers

Data from banks and housing finance companies show that HDFC Bank’s home loan rates remain broadly competitive. Among public sector banks, rates range between 7.10% and 7.25%, with State Bank of India and Punjab National Bank at the higher end of this band.

Private sector banks show a wider spread. ICICI Bank offers rates starting at 7.45%, while HDFC Bank is at 7.75%, and Axis Bank goes up to 8.00%. Some lenders such as RBL Bank and Yes Bank have higher rates at around 9.00%, reflecting differences in borrower profiles and risk pricing.

Housing finance companies display an even broader range. Bajaj Finserv and LIC Housing Finance offer rates around 7.15%, while Tata Capital stands at 7.50%. Rates rise sharply for some lenders, with IIFL Home Finance at 8.75%, Piramal Finance at 9.99%, and Sundaram Home Finance going as high as 10.65%. This highlights the variation based on credit risk, loan size, and borrower profile.

Move comes ahead of RBI policy

The timing of HDFC Bank’s revision is significant, as it comes just ahead of the RBI’s policy decision on April 8. Economists widely expect the central bank to maintain a status quo on the repo rate amid global uncertainty.

ICRA Chief Economist Aditi Nayar said the RBI is likely to remain cautious due to volatility in crude oil prices and geopolitical developments. “The central bank is expected to stay on pause and monitor inflation trends before taking further action,” she noted.

State Bank of India Chief Economist Soumya Kanti Ghosh highlighted that elevated crude prices and a weakening rupee are fuelling imported inflation, complicating the policy outlook.

Bank of Baroda Chief Economist Madan Sabnavis also expects no change in rates or stance, with the RBI likely to maintain a cautious tone while updating its growth and inflation projections.