HDFC Bank cuts lending rates by 20 bps across tenors; loans to be cheaper still

India's largest private sector lender HDFC Bank has cut its lending rate by 20 bps. The marginal cost of funds based lending rate (MCLR) has been reviewed across tenors since Tuesday, according to a statement on its website.  Basis points also known as bps or bips and are a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01% (1/100th of a percent).

The revised overnight MCLR stands at 7.60 per cent, while the one-year MCLR, to which a host of loans are linked, has been reviewed to 7.95 per cent. The three-year MCLR stands at 8.15 per cent from April 7 onward, it said.

Tenor          MCLR in %

Overnight        7.60

1 month          7.65

3 month          7.70

6 month          7.80

1 year              7.95

2 year              8.05

3 year              8.15

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The marginal cost of funds-based lending rate or MCLR is the minimum interest rate that a bank can lend at. MCLR is a tenor-linked internal benchmark, which means the rate is determined internally by the bank depending on the period left for the repayment of a loan.