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HDFC Bank, the country’s leading private bank, has announced a reduction in Marginal Cost of Funds-Based Lending Rate (MCLR) by 5 to 10 basis points (0.05% to 0.10%), giving a big relief to crores of its customers. According to the official notification issued by the bank, the revised interest rates have become effective from September 7, 2026.
After this new cut, the MCLR rates of various tenures of the bank have now come in the range of 7.90% to 8.60%, which was earlier between 8.00% to 8.65%. Banking experts believe that this decision has been taken after the bank has improved the cost of funds, which will directly benefit those floating rate borrowers whose loans are linked to the MCLR benchmark.
HDFC Bank has adjusted the interest rates according to different loan tenures. Most retail loans (like home loans, auto loans and personal loans) are linked to 1-year MCLR:
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Overnight and 1-month MCLR: With a reduction of 10 basis points, it has come down from 8.00% to 7.90%.
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3-Month MCLR: After a reduction of 10 bps from 8.15% to 8.05%.
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6-Month MCLR: With a reduction of 5 basis points, it has gone from 8.30% to 8.25%.
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1-Year MCLR: After the cut of 5 bps, it has come down from 8.40% to 8.35%.
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2-Year MCLR: It has reduced by 10 bps from 8.55% to 8.45%.
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3-Year MCLR: It has been fixed at 8.60% with a cut of 5 bps from 8.65%.
| Loan Tenure | Old rate (August 2026) | New Revised Rate (from 7 September 2026) | net cut |
| overnight | 8.00% | 7.90% | -0.10% (10 bps) |
| 1 month | 8.00% | 7.90% | -0.10% (10 bps) |
| 3 Months | 8.15% | 8.05% | -0.10% (10 bps) |
| 6 months | 8.30% | 8.25% | -0.05% (5 bps) |
| 1 year | 8.40% | 8.35% | -0.05% (5 bps) |
| 2 Years | 8.55% | 8.45% | -0.10% (10 bps) |
| 3 Years | 8.65% | 8.60% | -0.05% (5 bps) |
On hearing the news of reduction in interest rates, borrowers often expect that their monthly installment (EMI) will reduce from the next month. However, its actual impact depends on the loan terms and reset clause:
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EMI will not be reduced immediately: MCLR based loans have a fixed ‘reset date’, which is usually 6 months or 1 year. For example, if the next reset date of your home loan is January 2027, you will get the benefit of the new reduced rate only from January 2027 and not from September immediately.
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Will EMI or loan tenure reduce? Most of the banks reduce the total tenure of the loan while keeping the monthly EMI amount of the customers constant when the interest rate decreases. If a customer wants to reduce his EMI, he has to apply to the bank branch and get his EMI recalculated.
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How much will be the savings? If a customer has a home loan of Rs 30 lakh at 1-year MCLR for 20 years and his interest rate is reduced by 5 basis points (0.05%), the total interest savings over the entire tenure can be around Rs 22,000 to Rs 25,000.
As per Reserve Bank of India (RBI) guidelines, all new floating rate retail loans (home loans, auto loans etc.) issued after October 1, 2019 are mandatorily linked to the External Benchmark Lending Rate (EBLR/Repo Linked Lending Rate).
If your loan is directly linked to the Repo Rate of RBI, then this reduction in MCLR will not have any direct impact on your interest rate. This reduction is mainly beneficial for those old customers who had taken loans between 2016 to 2019 and have not yet switched their loans to the repo-linked system.
HDFC Bank has also clarified that its base rate remains stable at 8.70%. At the same time, the benchmark prime lending rate (BPLR) of the bank is 17.20% per annum.
There is no change in the fixed deposit (FD) rates offered by the bank due to this cut. The interest rates on FD of 2.75% to 6.50% for general citizens and 3.25% to 7.00% for senior citizens will continue as before.