Deposit rates climb, but slower than lending rates

1 Sep 2022 , 07:58 AM

Since the Reserve Bank began indicating higher rates in May, banks have increased loan rates more quickly than deposit rates.

According to the most recent information provided by the Reserve Bank of India, weighted average lending rates on outstanding loans have increased by 29 basis points since the 140-basis point increase in benchmark repo rates, but weighted average lending rates on outstanding deposits have increased by only 19 basis points.

In July 2022, the WALR on outstanding rupee loans increased by 8 basis points, from 8.93% to 9.01%. In July 2022, WALR on outstanding rupee loans from PSBs and PVBs climbed at domestic banks by 5 basis points and 10 basis points, respectively.

For outstanding SCB rupee term deposits, the weighted average domestic term deposit rate (WADTDR) increased by 9 basis points from 5.13% in June 2022 to 5.22% in July 2022.

In contrast to PVBs, where the WADTDR increased by 5 bps from 5.25% in June 2022 to 5.30 percent in July 2022, PSBs’ WADTDR increased by 10 bps from 5.17% in June 2022 to 5.27% in July 2022.

The commercial banks’ one-year median Marginal Cost of Fund-based Lending Rate (MCLR), which was 7.55% in July 2022 and 7.65% in August 2022, climbed by 10 basis points. From 7.55% in July 2022 to 7.65% in August 2022, the PSBs’ one-year median MCLR climbed. PVBs saw a month-over-month increase of 3 bps to 8.53%.

According to the Reserve Bank of India’s most recent report, the weighted average lending rate (WALR) on new rupee loans made by SCBs increased month over month by 24 basis points (one bps equals 0.01%), rising from 7.94% in June 2022 to 8.18% in July 2022.

In July 2022, the WALR on new rupee loans from domestic banks increased for private banks (PVBs) by 15 basis points to 9.05%, while it grew by 14 basis points for public sector banks (PSBs) to 7.46%.

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