While lending rates increased by 10-26 basis points (a bps 0.01 per cent) in September. Deposit rates increased by only 9 bps during the month. The Reserve Bank is raising its benchmark policy repo rate – the rate at which it lends to banks – from May this year as consumer price inflation remains above the target band of 2 to 6 per cent. When the Monetary Policy Committee met on 30 September, it raised repo rates by 50 bps to 5.9 per cent, raising the cumulative rate by 190 bps from May.
According to a latest release by the central bank, the weighted average lending rate (WALR) on new rupee loans of SCBs increased by 26 basis points (bps) from 8.33 per cent in August 2022 to 8.59 per cent in September 2022.
The WALR on outstanding rupee loans of SCBs increased by 10 bps to 9.23 per cent in September 2022 from 9.13 per cent in August 2022. while the average of one year marginal cost of funds The based lending rate (MCLR) increased by 15 bps to 7.90 per cent in October 2022 from 7.75 per cent in September 2022.
The mandatory external benchmark regime, introduced in October 2019 for credit pricing in select sectors, has strengthened the interest rate channel of monetary transmission. The proportion of outstanding floating rate loans linked to external benchmarks has increased from 9.1 per cent in March 2020 to 46.9 per cent in June 2022. Concurrently, the share of marginal cost of funds linked lending rate (MCLR) has come down. 46.5 percent in June 2022, reserve Bank of India in its latest monetary policy report.
SCB’s weighted average domestic term deposit rate (WADTDR) on outstanding rupee fixed deposits increased by 9 bps to 5.38 per cent in September 2022 from 5.29 per cent in August 2022.