HDFC Bank hikes short-term MCLRs by 5 bps

HDFC Bank on Friday hiked its marginal cost of funds lending rate (MCLR) to 8.40%, 8.45% and 8.55% for the one, three- and six-month tenures, respectively. The hike for all buckets was 5 basis points. HDFC Bank has hiked its short-term MCLR rates consecutively for the past four months.

However, the private sector lender left the benchmark one-year MCLR unchanged at 8.70%.

ICICI Bank — India’s second largest private sector bank — had on December 1, hiked short-term MCLR rates by 10 bps to 8.55%, 8.6% and 8.75% for its one, three and six-month tenures, respectively.

Industry experts have been pointing out that banks’ spreads on loans over deposits have expanded to a two-year high at 3.4%, led by an improvement in the current account savings account (CASA) ratio. The past 4-5 months have seen an increase in the MCLR rates leading to a hike in the deposit rates as well, data from RBI shows.

The spreads of HDFC Bank might see further improvement with its cost of funds seeing a decline over two years to 4.82% in September against 5.91% in 2016.

Headline deposits for the bank grew 20.9% year-on-year this quarter.

HDFC Bank