Transmission of April rate cut faster in case of new deposit rates: RBI

Transmission of the 25 bps repo rate cut in April was faster in case of new deposit rates than on new lending rates, the latest RBI data showed.

The weighted average domestic term deposit rate (WADTDR) on fresh rupee term deposits was down by 35 bps ( one basis point is 0.01 %) at 6.30 % in April 2025 as compared to 6.65 % in March 2025. The weighted average lending rate (WALR) on fresh rupee loans fell only 9 bps at 9.26 % in April 2025 from 9.35 % in March 2025

The weighted average domestic term deposit rate (WADTDR) on outstanding rupee term deposits was 7.01% in April 2025, down 2 bps from 7.03 % in March 2025.

The WALR on outstanding rupee loans declined 7 bps to 9.70 % in April 2025 from 9.77 % in March 2025.

One-year median Marginal Cost of Funds based Lending Rate (MCLR) moderated 5 bps to 8.95 % in May 2025 from 9% in April 2025.

In response to the 25 bps cut in policy repo rate during the February policy meeting, banks have reduced their repo linked external

benchmark lending rate (EBLR) by a similar magnitude. The MCLR, having a longer reset period and being linked to the cost of funds, may undergo adjustments with some lag.

Consequently, the WALR on outstanding rupee loans declined by 10 bps during the easing cycle (February-March 2025). In case of fresh loans, however, it has increased by 3 bps.