Hdfc Bank Diwali Gift Home Loan Interest Rate Cut Emi Reduction
The country’s largest private sector bank, HDFC Bank, has given a big gift to crores of its customers just before the festive season. Amidst the preparations for Diwali shopping and celebrations, the bank has announced a reduction in the interest rates on loans, which will make it easier for people to take loans for home, car or other needs. This step of the bank will not only benefit the new customers but is also expected to reduce the burden on the pockets of old customers.
How much was the reduction?
HDFC Bank has reduced its Marginal Cost of Funds Based Lending Rate (MCLR) by 0.15 percent. This deduction has been made for loans of different tenures. In financial language, MCLR is the minimum rate below which no bank can give a loan. When the bank reduces this rate, the floating rate loans given by it directly become cheaper.
Its biggest and direct benefit is available to customers taking home loans, car loans and personal loans, because the interest rates on these loans are directly linked to MCLR. The new rates implemented by the bank from October 7, 2025 will help customers reduce their monthly installments (EMIs). Let us see how much the rates have changed for different periods.
- Overnight MCLR: It has been reduced from 8.55% to 8.45%.
- One month MCLR: It has seen the maximum reduction of 0.15%, and it has come down from 8.55% to 8.40%.
- Three-month MCLR: This rate has also decreased by 0.15% from 8.60% to 8.45%.
- Six month MCLR: It has been reduced from 8.65% to 8.55%.
- One year MCLR: Most consumer loans are linked to this rate. This has also been reduced from 8.65% to 8.55%, which will provide relief to a large number of customers.
- Two-year and three-year MCLR: The rates for these longer tenors have been reduced from 8.70% to 8.60% and 8.75% to 8.65% respectively.
How much will it affect your pocket?
Now the biggest question is what effect this cut will have on your pocket. Whenever a bank reduces MCLR, the EMI of your loan running on floating interest rate gets reduced. When the reset date of your loan arrives, the new, reduced interest rate will be applicable on it. For example, if your home loan is linked to a one-year MCLR, your interest rate will be reduced by 0.10% on the next reset date, thereby reducing your EMI.
Although this deduction may seem small, it translates into a huge savings in long-term loans like home loans. Even a small reduction in your EMIs can save a significant amount over the year, allowing you to use that money to meet your other financial needs.
What is this MCLR, due to which your installment increases and decreases?
Many customers wonder what MCLR is and how it works. The full name of MCLR is ‘Marginal Cost of Funds Based Lending Rate’. It is an internal benchmark which was implemented by the Reserve Bank of India (RBI) in 2016. Banks decide the interest rates of their loans on the basis of this rate.
The calculation of MCLR depends on many factors. The most prominent of these are – the bank’s own cost of deposits (i.e. how much interest it is paying on deposits to the customers), RBI’s repo rate, cost of maintaining the Cash Reserve Ratio (CRR) and the bank’s own operating expenses. Whenever RBI makes any change in the repo rate in its monetary policy, banks also get pressured to change their MCLR.