repo rate: Lending and deposit rate moderate sequentially

Even as the transmission of the 250 basis point repo rate increase since May 2022 is still under way, some banks have even lowered lending rates and deposit rates sequentially, central bank data showed. One basis point is a hundredth of a percentage point.

The weighted average lending rate (WALR) on fresh rupee loans of commercial banks has fallen to 9.32 per cent in June, from 9.45 per cent in May.

The weighted average domestic term deposit rate (WADTDR) on fresh rupee term deposits stood at 6.46 per cent in June 2024, compared with 6.47 per cent in May.

The WADTDR on outstanding rupee term deposits of SCBs was at 6.91 per cent in June, compared to 6.93 per cent in May 2024.

The WALR on outstanding rupee loans of SCBs was placed at 9.91 per cent in June 2024, up from 9.88 per cent in May 2024.

One-Year median marginal cost of fund-based lending rate (MCLR) of SCBs remained unchanged at 8.85 per cent in July 2024.

The trend is significant because the Reserve Bank has kept the benchmark repo rate unchanged at 6.5 percent for over a year now.

The official stance of the central bank is that it wants the transmission of the rate hike to be full. However, some market participants say that the liquidity operations of the central bank have implicitly facilitated lower rates.