One basis point equals 0.01%.
Analysts are crediting this drop to seasonality in the credit cycle when growth remains tepid in the first quarter. While both sets of banks saw a month-on-month dip, it was higher for private banks at 44 bps versus 18 bps for public sector banks.
“This sequential dip has come after 11 months of consecutive rise and could have some seasonality due to March-ending,” said Jai Mundhra, research analyst with ICICI Securities. “While the dip has happened for the first time since the beginning of the current rate hike cycle, it is pertinent to note that lenders had earlier seen such dip in December and October 2022.”
The average lending rate on outstanding rupee loans increased by 4 bps from 9.72% in March to 9.76% in April.
Data also showed that average deposit rates on fresh rupee term deposits decreased by 12 bps from 6.48% in March to 6.36% in April.”Clearly deposit rates have peaked and with liquidity situation improving, rate cycle possibly could reverse,” a note by Macquarie Capital said.Data on loan mix also shows that until June 2022, both public and private sectors saw a decline in the share of MCLR-linked rate loans and a rising share of EBLR-linked rate loans.
The share of MCLR-linked loans has risen for public sector banks for the last two quarters and the share of EBLR-linked loans declined marginally. Private banks continue to see a rising trajectory on EBLR-linked loans and a declining share of MCLR-linked loans.
