The one-year marginal cost of funds-based lending rate (MCLR) of banks rose to 8.75% as of December, the highest since May 2019.
The 1-year MCLR stood at 8.70% in November 2023. Specifically, the MCLR is the highest at 9.60% for private banks. The weighted average lending rate on fresh rupee loans sanctioned fell to 9.34% in November from 9.50% in October. The weighted average domestic term deposit rate rose to 6.34% as of November from 6.31% in October.
The spread between the outstanding lending and deposit rates has narrowed in comparison to that between the fresh lending and deposit rates.
“With RBI turning the heat on unsecured lending products leading to banks turning cautious on high yield products such as unsecured personal loans, lending rates could also witness some pressure,” CareEdge Ratings said in a report.
The report added that with yields on capital market offerings remaining elevated, the interest rates on deposits are likely to increase going ahead.