EconomyMoney and credit
How fast does a repo move reach loans and deposits?
In the easing of Feb 2025 to Dec 2025, the RBI cut the repo rate by 1.25 points. By Aug 2026, rates on new loans had moved 72 basis points, 58% of it, rates on new deposits 95 basis points, and rates on loans already on the books 91 basis points. Since banks had to link new floating-rate loans to an outside benchmark, in October 2019, a repo move reaches new loans faster. It does not reach more of them: we predicted it would, and we were wrong.
Written for borrowers, savers and anyone who wants to know how much a repo cut or rise really matters. Lending rates to Aug 2026.
Cycle by cycle
A cycle is a run of repo moves in one direction. Each is measured from the month before its first move to the month before the next cycle's first move, so no cycle borrows the next one's changes. There have been five complete cycles since the RBI began publishing the rate on new loans in late 2014.
How far each rate had moved, cycle by cycle
Change since the month before each cycle's first repo move, basis points (100 = one percentage point). New-deposit rates are published from 2020.
How to read it. Where the coloured line tracks the grey one, the repo move was passed straight on. A gap that stays open is the part of the move that had not arrived when the next cycle began.
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How much gets through
Six months after each cycle's last move, how much of the repo change had reached each rate. The most was in the 2015-17 easing: 95% for new loans. In the 2025 easing it was 64%.
Share of the repo move passed through, six months after the last move
% of each cycle's repo change that had reached each rate (100 = all of it). A blank bar: the next cycle began first, or RBI did not yet publish the rate.
How to read it. Rates on new loans and deposits move first; those on old loans and deposits follow as they reset or mature. Above 100, the rate moved further than the repo did.
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How fast
Count the months a rate took to make up half the repo's move, less the months the repo itself took. New-loan rates trailed by 8 months in the 2015-17 easing, 1 month in the 2018 tightening and 6 months in the 2019-20 easing; since external benchmarks, by 3 months in the 2022-23 tightening and 0 months in the 2025 easing. This measure was added after the test below was graded, so it is a description, not a result.
Months each rate trailed the repo in reaching half the move
0 = kept pace with the repo. A blank bar: the rate never made up half the move before the next cycle began, or was not yet published.
How to read it. Long easing cycles are slow by construction, because the repo itself takes months to fall; subtracting the repo's own time makes short and long cycles comparable.
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What we predicted
Before computing any of this we wrote down what we expected (pre-registration C80 to C82). Because there are so few cycles, these are descriptions with a stated rule, not tests with a p-value. The main prediction failed.
| Test | Question | What we found | Result | More |
|---|---|---|---|---|
| C80 | Do cycles since external benchmarks pass more of a repo move to new loans, six months after the last move? | Later: tightening 2022-23 79% and easing 2025 64%. Earlier: easing 2015-17 95% and easing 2019-20 68%. | Failed | |
| C81a | In tightening 2022-23, did new-deposit rates pass through more than new-loan rates, six months after the last move? | New deposits 92%, new loans 79%. | Held | |
| C81b | In easing 2025, did new-deposit rates pass through less than new-loan rates, by the latest month? | New deposits 76%, new loans 58% (Aug 2026). | Failed | |
| C82 | After the Oct 2026 rise, will the new-loan rate be up by at least half the rise six months later, and the new-deposit rate by less? | Graded on the figure for Apr 2027, which the RBI publishes about a month after. | Pending |
Why C80 failed: in the 2025 easing, 84% of the cut had reached new loans by the month of the last move, but new-loan rates then rose again, leaving 64% passed through six months later. The 2015-17 easing ran for 31 months from first move to last, so most of its moves had worked through before the clock started. Measured from the last move, a long cycle looks complete. The full rules and the results log are in the method note.
The loans already on the books
Most borrowers have an existing loan, not a new one. Their rate moves only when the loan resets, at a date set by its benchmark. In the 2025 easing, the average rate on all outstanding loans had moved 91 basis points by Aug 2026, 73% of the repo change.
Outstanding loans and deposits, cycle by cycle
Change since the month before each cycle's first repo move, basis points.
How to read it. Fixed-rate deposits reprice only as they mature, so the deposit line moves slowly in every cycle. Loans linked to MCLR reset once a year, those linked to the repo within three months.
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Over the repo rate
What banks charge on new loans above the repo rate, and what they pay on new deposits. In Aug 2026 new loans cost 336 basis points more than the repo rate, against a median of 349 basis points since 2014. The gap between new loans and new deposits was 294 basis points.
Rates on new loans and new deposits, over the repo rate
Monthly, basis points. New-deposit rates from 2020.
How to read it. The loan spread widens when the repo falls faster than loan rates and narrows when it rises faster: the lag shows up here as a swing against each cycle.
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The rates themselves
For reference, the RBI's figures as published. The median one-year MCLR, the benchmark most older corporate and many home loans are priced on, moves more slowly than the rate on new loans.
Lending and deposit rates, and the repo rate
Weighted averages across scheduled commercial banks, monthly.
How to read it. The new-loan rate is an average over every loan made that month, so its mix of borrowers moves it as well as banks' pricing.
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The rise now under way
The RBI raised the repo rate by 0.25 points in Oct 2026. We predicted, before any of its effect could be seen, that by the Apr 2027 figure the rate on new loans will be up by at least half of that and the rate on new deposits by less. The baseline is the Sept 2026 figure, which the RBI has not yet published. This page will grade it when the data arrive.
The workings
The question
Data
Every chart has a table view, a CSV download and a link to its published JSON. Bundles are listed in data status.