Indian lending rates continued their downward trend in February as private sector banks led rate cuts on fresh loans. The weighted average lending rate on new rupee loans fell five basis points to 8.44%, with private banks cutting rates by 16 basis points to 9.16% and foreign banks reducing rates by 10 basis points to 7.71%. However, public sector banks raised fresh lending rates by nine basis points to 7.84%. The transmission on outstanding loans remains sluggish, declining just four basis points to 9.00%, despite the RBI cutting the repo rate by a cumulative 125 basis points over the past year. Private sector banks reduced outstanding loan rates by six basis points to 9.91%, while public sector banks remained largely unchanged. This uneven transmission across bank categories highlights the gradual pace of rate pass-through to borrowers despite significant monetary easing.
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