All major banks have increased their external benchmark-based lending rates (EBLRs) by 190 basis points in line with the Reserve Bank’s policy hike. repo rate Since May this year, however, they have been slow in raising deposit rates. Reserve Bank To control inflation, the key short-term lending rate (repo) has been increased by 190 basis points in four steps since May.

reserve Bank of Indiaof monetary policy committee ,mpc), which makes recommendations to the Center Bank With regard to interest rates, it is set to meet again early next month amid expectations of another repo rate hike.

According to an RBI article, till October 2022, all banks have to increase their EBLR by 190 bps along with the increase in the policy repo rate from May 2022.

In addition, banks have increased their 1-year average marginal cost of funds based lending rate (MCLR) by 85 bps from May to October 2022. Rate of interest Linked to an external benchmark, such as the RBI’s repo rate or treasury bill yield. As a result, monetary policy transmission by banks has accelerated.

However, banks have increased interest rates on term deposits by a very small margin.

Median term deposit rates (average card rate on retail deposits) increased by 48 bps on fresh deposits from May to October 2022. Banks have increased their bulk deposit rates in comparison to retail deposit rates.

Among bank groups, the article said, the transmission in lending and deposit rates of private sector banks (PVBs) has exceeded that of public sector banks (PSBs) in the current tightening period.

Credit growth for PVBs has been higher than that of PSBs in the current interest rate hardening period beginning May this year.

In view of the increase in credit demand, private banks have increased their lending and deposit rates to maintain high net interest margin (NIM).

The next meeting of the MPC has been scheduled during December 5-7, 2022.