HDFC Bank has lowered its Marginal Cost of Funds-based Lending Rate (MCLR) across all listed tenures, bringing potential relief to borrowers whose floating-rate credit facilities remain pegged to the benchmark. The latest revision took effect on September 7, 2026, introducing reductions between 5 and 10 basis points that pull the bank's MCLR range down to 7.90%-8.60%. This adjustment directly impacts existing customers holding MCLR-linked home loans, personal loans, and business loans, although the direct financial impact on monthly outlays depends heavily on individual loan structures.
Tenure-Wise Breakdown of New Rates
The lender has revised rates across all seven distinct tenures, applying a 10-basis-point reduction to four of them and a 5-basis-point trim to the remaining three. The overnight MCLR dropped by 10 basis points from 8.00% to 7.90%, matching the one-month MCLR which also fell by 10 basis points from 8.00% to 7.90%. The three-month benchmark was reduced by 10 basis points from 8.15% to 8.05%. Meanwhile, the six-month MCLR was lowered by 5 basis points from 8.30% to 8.25%, and the crucial one-year MCLR decreased by 5 basis points from 8.40% to 8.35%. Longer durations saw the two-year rate decline by 10 basis points from 8.55% to 8.45%, while the three-year MCLR was trimmed by 5 basis points from 8.65% to 8.60%, remaining the highest among all listed benchmarks.
How the Revision Impacts Borrowers
While a lower benchmark rate points toward a reduced interest burden for borrowers tied to the MCLR system, the transmission is not instantaneous. Existing floating-rate loans operate on designated reset frequencies, meaning the revised benchmark only applies when a specific loan reaches its scheduled reset date. Because of this cycle, two borrowers with identical loan profiles might experience the relief at different times. Furthermore, the final lending rate incorporates an applicable spread charged over the MCLR, ensuring that the benchmark reduction does not equate to a uniform drop in every borrower's effective rate. A basis point equals one-hundredth of a percentage point, meaning a 10 bps cut equals 0.10 percentage points, which applies to the bank's internal cost metrics rather than serving as a direct percentage reduction in loan EMIs.
