If you have taken a home loan, car loan, or personal loan from HDFC Bank, there is an important update for you. While the Reserve Bank of India (RBI) has kept the repo rate unchanged at 5.25 per cent for the second consecutive policy review, the country’s biggest private bank has increased its marginal cost of funds-based lending rate (MCLR) by 10 basis points. These new rates have become fully effective from June 8, 2026. This move by the bank will not only make taking a new loan more expensive but will also increase the monthly EMI burden of existing customers.
What is MCLR
MCLR stands for Marginal Cost of Funds-Based Lending Rate. This is the minimum rate at which banks calculate certain types of loans. Banks use MCLR as a benchmark to determine their loan interest rates. In simple terms, the loan becomes more expensive as MCLR rates rise.
Why is HDFC Bank increasing MCLR?
While the RBI has not increased the repo rate, banks can increase MCLR, considering their funding costs, deposit interest rates, and market liquidity. The decision by the bank is an indicator that its funding cost may be under pressure.
Which loans will become expensive now?
Following this decision by HDFC Bank, all retail and corporate loans linked to the MCLR benchmark will become expensive:
Home loans: Most older home loans are linked to the 1-year MCLR, which has now increased from 8.35 per cent to 8.40 per cent. This will result in higher EMIs for home loan holders.
Car and Personal Loans: Interest rates on auto and personal loans taken on floating rates (MCLR-based) will also increase.
Business Loans: The bank has increased the rates by a maximum of 10 bps (0.10%) on loans with a tenure of 2 years, which will make working capital loans for companies and businessmen much more expensive.
| Loan Tenure | old interest rate | New interest rate (from June 8) | total increase |
| Overnight (one day) | 8.05% | 8.10% | 5 bps (0.05%) |
| 1 month | 8.05% | 8.05% | no changes |
| 3 months | 8.15% | 8.20% | 5 bps (0.05%) |
| 6 months | 8.30% | 8.35% | 5 bps (0.05%) |
| 1 year | 8.35% | 8.40% | 5 bps (0.05%) |
| 2 years | 8.45% | 8.55% | 10 bps (0.10%) |
| 3 year | 8.60% | 8.65% | 5 bps (0.05%) |
Will your EMI increase immediately?
The good news for existing customers is that they won’t feel the impact of this increase immediately. Each MCLR-based loan has a reset period, typically lasting six months or one year. The bank will apply the new interest rates to your loan upon the reset date specified in your loan agreement.
ALSO READ | Govt provided Rs 1.23 lakh crore to OMCs to keep fuel prices steady amid Middle East crisis: Sources
