Deposit rates surge as RBI data shows banks paying more for funds
Weighted average deposit rate on fresh term deposits jumps 42 bps to 6.07%, while lending rates edge lower
What changed
- WADTDR on fresh rupee term deposits rises to 6.07% in March from 5.65% in February
- WALR on fresh rupee loans declines to 8.40% from 8.44% over the same period
- 1-Year median MCLR increases to 8.55% in April from 8.40% in March
The read
The Reserve Bank of India’s data for March shows a sharp rise in deposit rates, with the weighted average on fresh term deposits jumping 42 basis points to 6.07%. Banks are paying more for funds even as the weighted average lending rate on fresh loans eased marginally to 8.40% from 8.44% in February. The one-year median MCLR, a key benchmark, rose further in April to 8.55%, signalling that lending rates may have bottomed. The combination of rising deposit costs and stable-to-lower loan yields squeezes net interest margins. Banks are scrambling for deposits while loan demand remains tepid — a recipe for tighter profitability ahead.
Key numbers
- WALR fresh loans: 8.40%
- WADTDR fresh deposits: 6.07%
- 1-Year MCLR: 8.55%
Primary source: rbi.org.in