HDFC Bank has cut its Marginal Cost of Funds-based Lending Rate (MCLR) by 5 basis points (bps) across most loan tenures. The move coming days after the Reserve Bank of India (RBI) has announced to take a pause on the repo rate, keeping it at 5.25 per cent.

The revised MCLR rates came into effect on August 7, 2026, and the HDFC Bank has reduced rates for six of its seven listed tenures, while leaving the two-year MCLR unchanged.

The reduction is by 0.05 percentage point at the affected tenures, one bps is one-hundredth of a percentage point. Now, the bank’s MCLR ranges from 8 per cent to 8.65 per cent, depending on the reset tenor.

A Loan interest rate is calculated by the maths of benchmark rate + spread. This is subject to the loan agreement.

A 5 bps MCLR cut does not necessarily translate into a 5 bps reduction in the final interest rate immediately.

As the MCLR goes down, it does not automatically mean that the home loan or personal loan linked with the bank will also become cheaper. The impact depends on the benchmark to which the loan is linked.

In case a borrower’s loan is linked to the one-year MCLR. And once the benchmark has fallen from 8.45 per cent to 8.40 per cent, but the borrower’s actual lending rate will still depend on the spread charged by the bank.

Notably, the MCLR-linked loans do not necessarily reprice the moment a bank changes its MCLR. The applicable reset frequency is part of the loan contract, and the RBI rules require MCLR-linked floating-rate loans to have a reset period of one year or less.

In this case, the borrowers need to check three things. One is the benchmark applicable to their loan; Spread charged over that benchmark; and The next reset date.