HDFC Bank has officially increased its MCLR (marginal cost of funds based lending rate) for one, two and three year loan tenors. These rates now stand at 8.75%, 8.90% and 9.05% respectively as per reports. This decision to increases MCLR rates comes after a drop in the bank’s CASA (current account savings account) ratio. The MCLR has been hiked by 5 basis points for these tenors. HDFC Bank has been steadily increasing its rates over the last few months and on the 7th of December, 2018, a 5 basis point hike was given to the one, three and six month tenor loans.
ICICI Bank currently has its one year MCLR rate at 8.8% while this is 8.5% for the SBI (State Bank of India). The benchmark 10-year yield from bonds came down by 67 basis points over the last four months and the advance aggregate worked out to roughly Rs. 7.8 lakh crore for HDFC which indicates a year-on-year increase of about 23.8%. Deposits also increased to touch 8.5 lakh crore by December 31st, 2018 which indicates growth of 22%.
Over the last four to five months, several banks have been increasing their MCLR rates along with deposit rates. HDFC had a CASA ratio standing at 41% by the end of December 2018. The one year deposit rate is currently 7.3% at HDFC Bank while the one year MCLR is now 8.75% which means a spread of 1.45%. ICICI Bank had previously increased its short-term MCLR interest rates by 10 basis points. The rates were hiked to 8.75%, 8.55% and 8.6% for the six month, one month and three month tenors.