The weighted average interest rate on fresh rupee term deposits of banks decreased by 12 basis points to 6.36 per cent in April from 6.48 per cent in March, reflecting that liquidity pressure is easing. This is the first time in the past one year that interest rates have eased both on fresh term deposits as well as fresh rupee loans of banks.
The weighted average lending rate (WALR) on fresh rupee loans of scheduled commercial banks decreased by 23 basis points from 9.32 per cent in March to 9.09 per cent in April.
In the same month, the Reserve Bank of India’s Monetary Policy Committee kept the policy repo rate on hold at 6.5 per cent. Sanjay Agarwal, senior director, CARE Ratings, said credit demand moderated in April, the start of the new financial year, over March. That reduced pressure on liquidity and led to interest rates on fresh term deposits easing.
The rise in rates seems to have been arrested for now at the end of May. Deposits coming from the withdrawal of the Rs 2,000 note may improve liquidity. The trajectory of rates on the deposit side will be shaped by the pace of credit offtake, Agarwal added.
However, the weighted average domestic term deposit rate on outstanding rupee term deposits increased by 12 basis points from 6.16 per cent in March to 6.28 per cent in April.
The weighted average lending rate on outstanding rupee loans of SCBs increased by four basis points from 9.72 per cent in March to 9.76 per cent in April. The one-year median marginal cost of fund-based lending rate of SCBs remained unchanged at 8.60 per cent in May.