Lending rates rise faster than deposit rates

Banks have been more swift in raising loan rates than deposit rates since the Reserve Bank started signaling higher rates in May.

Ever since the 140 bps hike in benchmark repo rates, weighted average lending rates on outstanding loans have risen 29 basis points, but weighted average rates on outstanding deposits has gone up by only 19 bps, according to the latest data released by the Reserve Bank of India WALR on outstanding rupee loans increased by 8 bps from 8.93 to 9.01 per cent in July 2022. Among domestic banks, WALR on outstanding rupee loans of PSBs and PVBs increased by 5 bps and 10 bps, respectively, during July 2022.

The weighted average domestic term deposit rate (WADTDR) for outstanding rupee term deposits of SCBs increased by 9 bps from 5.13 per cent in June 2022 to 5.22 per cent in July 2022.

The WADTDR of PSBs rose by 10 bps from 5.17 per cent in June 2022 to 5.27 per cent in July 2022, whereas for PVBs, it rose by 5 bps from 5.25 per cent in June 2022 to 5.30 per cent in July 2022.

One year median Marginal Cost of Fund based Lending Rate (MCLR) of commercial banks increased by 10 bps from 7.55 per cent in July 2022 to 7.65 per cent in August 2022. For PSBs, One year median MCLR increased from 7.55 per cent in July 2022 to 7.65 per cent in August 2022. In case of PVBs, it increased by 3 bps to 8.53 per cent during the month.

On month-on-month basis, the weighted average lending rate (WALR) on fresh rupee loans of SCBs increased by 24 basis points (bps- one bps is 0.01 per cent) from 7.94 per cent in June 2022 to 8.18 per cent in July 2022, according to the latest release by the Reserve Bank of India. Amongst domestic banks, WALR on fresh rupee loans of public sector banks (PSBs) increased by 14 bps to 7.46 per cent in July 2022, while for private banks (PVBs), it increased by 15 bps to 9.05 per cent during the month.

Source: Economic Times

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