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Informist, Wednesday, Apr. 30, 2025

 

--RBI: Weighted avg rate on new bank loans 9.35% Mar, down 5 bps from Feb

--RBI: Weighted avg rate on new bank deposits 6.65% Mar, up 16 bps from Feb

 

NEW DELHI – The easing of financial conditions by the Reserve Bank of India was passed on by banks to borrowers in March, with the weighted average rate on new loans falling to 9.35% from 9.40% in February, data released Wednesday by the Indian central bank showed. As per the data, foreign banks cut their lending rates by as much as 24 bps to 8.93%, while public sector lenders lowered them by a marginal 2 bps to 8.66%. Private sector banks, meanwhile, increased interest rates on new loans by 8 bps to 10.32%.

 

The RBI's Monetary Policy Committee cut the policy repo rate by 25 bps to 6.25% in early February, with the central bank infusing massive amounts of liquidity after its dollar sales since late 2024 and scheduled tax outflows left the banking system parched for rupees. Starting with the cut in Cash Reserve Ratio announced in December, the RBI is on track to infuse nearly INR 11 trillion of durable liquidity through various instruments as it looks to push through the transmission of its interest rate cuts by ensuring sufficiently comfortable liquidity conditions. The MPC, which followed up its rate cut in February with another one in April, is widely expected to cut the repo rate by 25 bps in both June and August to take the repo rate to 5.50%.

 

On the deposit side, new term deposits of commercial banks saw interest rates rise by 16 bps to 6.65% as banks looked to bolster their balance sheet at the end of the financial year. While private and foreign banks increased term deposit rates by 17-18 bps to 6.69% and 5.86%, respectively, interest rates offered by PSU banks inched up by a mere 1 basis point to 7.01%. In the last month of 2023-24 (Apr-Mar), PSU banks had increased interest rates on fresh term deposits by 12 bps. Private and foreign banks had raised their rates by 15 bps and 17 bps, respectively, the data showed.  End

 

Reported by Siddharth Upasani

Edited by Avishek Dutta

 

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