HDFC Bank has announced a rise in its Marginal Cost of Funds based Lending Rate (MCLR) by up to 10 basis points, setting the rates between 8.6% (overnight) and 9.25% (three-year) effective from Saturday. This decision follows the Reserve Bank of India's (RBI) lending regime that mandates banks to link their home loan interest rates to selected external benchmarks, such as the RBI's repo rate or Treasury Bill yield.
Simultaneously, HDFC Bank has reduced its fixed deposit interest rates for select tenures. The bank now offers a range of 3% to 7.20% for general customers and 3.5% to 7.75% for senior citizens. These changes come as the Monetary Policy Committee (MPC), led by RBI Governor Shaktikanta Das, continues to maintain the policy repo rate at 6.50%.
Earlier this week, HDFC Bank also raised its base rate from 9.2% to 9.25% and its Prime Lending Rate (PLR) from 17.70% to 17.85% per annum, both effective since September 25, 2023. The bank stated that these adjustments in interest rates could have significant implications for those considering loans and credit facilities. According to InvestingPro data, HDFC Bank has a market cap of 428.2M USD and a P/E ratio of 2.83, indicating a potentially attractive valuation for investors.
Several other leading banks have followed suit, revising their one-year MCLR rates effective from October 1, 2023. These changes align with the RBI's approach of allowing banks the flexibility to charge a spread over these benchmarks.
This series of adjustments by HDFC Bank and other financial institutions reflects the ongoing evolution of India's banking sector in response to macroeconomic trends and regulatory guidelines set out by the RBI. As per InvestingPro Tips, HDFC Bank has been a prominent player in the banking industry, with consistently increasing earnings per share and a high return over the last decade.
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