Business Standard

Difference between rise in median MCLR, term deposits crosses 40 bps

Interest rates on fresh deposits move up faster than fresh loans

Gap between rise in median MCLR and term deposits over 40 basis points
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Subrata Panda Mumbai
The rate hikes undertaken by the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) since May to bring down the inflation rate has resulted in a 120 basis points (bps) increase in the one-year median marginal cost of funds-based lending rate (MCLR) by banks.

However, medium-term deposit rates have moved up by 78 bps, resulting in a little over 40 bps gap in the transmission of rates between assets and liabilities.

Since May 2022, the benchmark repo rate has gone up by 250 bps to 6.5 per cent and the external benchmark-linked loans of banks have risen by the

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First Published: Feb 19 2023 | 8:34 PM IST

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