Average lending rates of scheduled commercial banks declining in line with repo rate cut

RBI data also showed that the weighted average lending rate on outstanding rupee loans of scheduled commercial banks dropped marginally to 9.69 per cent in May from 9.70 per cent in April.

The 1-year median Marginal Cost of Funds based Lending Rate (MCLR) of scheduled commercial banks moderated to 8.90 per cent in June from 8.95 per cent in May.

The share of External Benchmark based Lending Rate (EBLR) linked loans in total outstanding floating rate rupee loans of scheduled commercial banks was 61.6 per cent at end-March 2025 (60.6 per cent at end-December 2024), while that of MCLR linked loans was 34.9 per cent (35.9 per cent at end-December 2024).

On the contrary, the weighted average domestic term deposit rate (WADTDR) on fresh rupee term deposits of scheduled commercial banks stood at 6.11 per cent in May as compared to 6.34 per cent in April 2025.

The weighted average domestic term deposit rate (WADTDR) on outstanding rupee term deposits of scheduled commercial banks also dropped to 7.07 per cent in May 2025 against 7.10 per cent in April 2025.

Many scheduled commercial banks have adjusted their loan interest rates, aimed at transmitting the benefits of the cumulative 100 basis points repo rate cut by the RBI monetary policy committee since early this year.

These moves are seen as an effort to improve loan affordability in India.

The recent frontloaded repo rate cut by the RBI was understandably aimed at boosting economy, which has relatively moderated. The policy rate cut and the subsequent decline in interest rates by banks will create demand for fresh credit, giving fresh life to the economy.

After a total of 100 basis point repo rate reduction since February 2025, the scope for more rate cuts, however, is limited, as was indicated by RBI Governor Sanjay Malhotra after the latest monetary policy review meeting. (ANI)