HDFC Bank On RBI Rate Cuts: Loans To Get Cheaper Soon? Bank Says ‘Absolutely’— But Here’s The Catch

HDFC Bank On RBI Rate Cuts: India’s largest private lender, HDFC Bank, says borrowers can expect to feel the impact of recent RBI rate cuts starting this quarter. 

The comments came during the bank’s Q4 FY25 earnings call, where leadership explained how the lower repo rate will affect customers and the bank’s own strategy going forward.

How Repo Rate Cuts Affect You

The repo rate is the interest rate at which the Reserve Bank of India lends money to banks. When it’s cut, banks can borrow more cheaply, and in turn, are expected to pass on that benefit to borrowers by reducing interest rates on loans.

However, according to HDFC Bank, the benefit doesn’t show up immediately for everyone. "It depends product to product… mortgage product is different, wholesale product is different," the bank’s CFO explained.

However, most floating-rate loans, like home loans or MSME loans that are linked to the repo rate, will adjust within a few months. "Will a good amount reprice in a month? Yes. Will most of it reprice in three months? Absolutely."

The 50 basis point repo rate cut in February 2025, for example, will start showing up in loan rates this April to June quarter (Q1 FY26).

Also Read: HDFC Bank Q4 Results 2025: Private Lender’s Net Profit Soars 6.7%; Rs 22 Dividend Announcement - Check Full Details

Why the RBI Is Cutting Rates

HDFC Bank CEO Sashidhar Jagdishan said the rate cuts are timely, as India’s economy needs support. "RBI has recently commenced cutting rates… The change in stance from neutral to accommodative is a welcome relief to all of us."

He said the move will help boost rural spending, consumer demand, and investments, all of which are important to keep the economy growing. However, he also warned that global uncertainties—like trade tariffs and inflation—could slow down growth elsewhere.

"Corporates have adopted a wait-and-watch stance, and we are waiting for more clarity… We remain watchful."

Bank’s Own Growth Back on Track

After its major merger with HDFC Ltd last year, the bank had to clean up its credit-deposit (CD) ratio, which had gone too high. That’s now back to normal. "Our credit deposit ratio has been brought down from about 110% to 96%," Jagdishan said. "Our deposits have grown faster than the system, and so have they grown faster than our loans."

With more stable funding, the bank is now ready to grow its loan book again in FY26.

Rate Cuts Will Help, But Gradually

For customers, lower interest rates are coming—but with a slight delay, depending on loan type. For the bank, rate cuts will reduce funding costs and open up room to lend more, supporting growth in FY26. As Jagdishan summed it up, "We are well placed to grow in both assets and deposits."

RBI Rate Cut

The Monetary Policy Committee (MPC), in its 54th meeting and the first of the financial year 2025–26, unanimously decided to reduce the policy repo rate by 25 basis points, bringing it down to 6 per cent with immediate effect. The repo rate is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks, and a cut in this rate is aimed at boosting lending and investment.