HDFC Bank , the second largest private sector lender of the country, increased its marginal cost of fund-based lending rate (MCLR) by 10 basis points (bps) across various loan tenures.
As a result, its one-year MCLR is now at 8.4%. The new rates came into effect from Thursday, according to the bank’s website.
The move comes after all major banks, including State Bank of India (SBI) and ICICI Bank, increased MCLR by an equal amount last week.
MCLR is the benchmark lending rate to which all other loan rates are linked.
An increase in the MCLR would impact equated monthly instalments (EMIs) for home, car loans and other products.
More banks are to likely increase lending rates, especially after the Reserve Bank of India (RBI) increased the key policy rate or the repo rate by 25 bps to 6.25% on Wednesday.
The rate increase comes after a gap of four and a half years, which is mainly due to rising crude oil prices which is impacting retail inflation, while inflation expectations among households are rising as well.