Interest rates on new bank deposits in India eased in July, while borrowing costs remained largely stable, according to RBI data, hinting at a softer deposit pricing despite steady lending rates.
Interest rates on fresh bank deposits in India eased in July even as lending costs stayed broadly stable, according to Reserve Bank of India data released on Monday. The central bank’s figures show that the average rate on new rupee term deposits slipped to 5.90% from 5.99% in June, while the average rate on fresh rupee loans inched down only marginally to 8.52% from 8.53%. Reuters-style reporting from Indian outlets said the pattern points to a banking system in which deposit pricing has softened more noticeably than borrowing costs.
The RBI’s data also showed that the average rate on loans already on banks’ books moved up slightly to 8.97% in July from 8.96% a month earlier. On the deposit side, the average rate on outstanding rupee term deposits was unchanged at 6.58%. The central bank said lending rates on both new and existing rupee loans showed mixed movements across sectors during the month.
Sector-wise, the cost of fresh borrowing fell for some parts of the economy and rose for others. Rates on new loans to trade declined to 7.79% from 8.00% in June, while rates for professional services eased to 8.19% from 8.32%. By contrast, infrastructure lending rose to 7.71% from 7.56%, large industries saw an increase to 7.53% from 7.46%, and loans to micro, small and medium-sized enterprises edged up to 8.82% from 8.78%.
The RBI data covers scheduled commercial banks, excluding regional rural banks and small finance banks. Traders Union noted separately that a one-year median marginal cost of funds-based lending rate stood at 8.70% in August, up from 8.60% in July, suggesting some banks may still be adjusting their funding and loan-pricing calculations even as the broader lending picture remains mixed.
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