A basis point is one-hundredth of a percentage point.
Following the revision, the bank’s MCLR now ranges between 8.10% and 8.55%, compared with the earlier band of 8.15% to 8.55%. The changes are limited to shorter tenures, while most medium- and long-term rates remain unchanged.
Revised MCLR rates
| Tenure | Previous Rate | Revised Rate | Change |
| Overnight | 8.15% | 8.10% | -5 bps |
| 1 Month | 8.15% | 8.10% | -5 bps |
| 3 Months | 8.25% | 8.20% | -5 bps |
| 6 Months | 8.35% | 8.35% | No change |
| 1 Year | 8.35% | 8.35% | No change |
| 2 Years | 8.45% | 8.45% | No change |
| 3 Years | 8.55% | 8.55% | No change |
What is MCLR?
MCLR, or Marginal Cost of Funds-based Lending Rate, is the minimum interest rate below which banks are generally not permitted to lend. Introduced by the Reserve Bank of India in 2016, it is linked to a bank’s marginal cost of funds, including deposits and borrowings, along with operating costs and cash reserve requirements.
Banks publish MCLR rates for different tenures, and loans linked to MCLR are typically reset periodically based on the applicable benchmark.
Who is impacted?
- Existing borrowers with MCLR-linked loans: Those whose loans are tied to short-term MCLR benchmarks may see a slight reduction in interest outgo after the next reset date.
- Corporate and short-duration borrowers: Businesses relying on working capital or short-term loans linked to MCLR could benefit more directly from the cut.
- Retail borrowers (limited impact): Since most home and personal loans are linked to longer-tenure MCLR (such as one-year), which remains unchanged, the immediate benefit for these borrowers may be limited.
Policy backdrop
The move comes at a time the Monetary Policy Committee of the Reserve Bank of India began its policy meeting on April 6, with the outcome expected on April 8. While expectations of immediate rate hikes remain uncertain, global volatility, firm crude oil prices, and capital flows continue to shape the broader interest rate environment.
