The overall weighted average lending rate (WALR) on fresh and outstanding rupee loans has come down by 82 bps and 90 bps, respectively
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Total flow of financial resources to the commercial sector zoomed 148 per cent year-on-year (y-o-y) to ₹7.73 lakh crore in the first three months of the current financial year against ₹3.12 lakh crore in the year ago period, per RBI’s latest monthly bulletin.Out of the aforementioned flows, non-food bank credit alone accounted for about 65 per cent (or ₹5.05 lakh crore) and non-bank (domestic and foreign) sources accounting for the rest ( ₹2.68 lakh crore).In the year ago period, non-bank sources of credit accounted for a chunk or 84 per cent (at ₹2.62 lakh crore) of the total flow of financial resources to the commercial sector while non-food bank credit accounted for just 16 per cent (or ₹50,000 crore).With interest rates in the bond market tightening, corporates tapped banks for credit in a big way in the first three months of current. This is underscored by the fact that non-food bank credit offtake shot up to ₹5.05 lakh crore in the first three months of FY27 against just ₹50,000 crore in the year ago period.“Liquidity conditions improved further, supporting the ongoing robust credit growth,” said RBI officials in the article “State of the Economy” published in the latest monthly bulletin.On a cumulative basis, the total corporate bond issuances were at ₹86,000 crore in April-May of FY27, lower than ₹1.87 lakh crore in the corresponding period of the previous year.During the current easing cycle (February 2025– May 2026), scheduled commercial banks (SCBs) have lowered both repo-linked external benchmark-based lending rates (EBLR) and marginal cost of funds-based lending rates (MCLR), per the article.While there has been a one to one transmission of the 125 basis points (bps) repo rate cut to the EBLR, the one-year median MCLR has come down by just 35 bps.The overall weighted average lending rate (WALR) on fresh and outstanding rupee loans has come down by 82 bps and 90 bps, respectively.Pass-through to fresh lending rates was strong in the education (170 bps), vehicle (123 bps), infrastructure and MSMEs (118 bps each) and housing (109 bps) sectors and EBLR-mandated sectorsThe weighted average domestic term deposit rate on fresh and outstanding deposits has come down by 78 bps and 52 bps, respectively.Among domestic banks, private sector banks exhibited stronger pass-through to lending rates relative to public sector banks, according to the article. The pass-through for both deposit and lending rates has been higher for foreign banks.The RBI officials noted that the global economy is dealing with uncertain economic environment, supply chain disruptions, and fragmented trading relationships.“Amidst these uncertainties, India remains among the fastest growing major economies across the globe and has been able to sustain the momentum in economic activities through June. Both industrial and services sector indicators remained firm.“The farm sector is witnessing uneven southwest monsoon, but the impact on food inflation may be mitigated by comfortable foodgrain stocks,” they saidFurther, the momentum of external trade sustained as reflected in high growth in exports and imports in Q1 2026- 27. This is likely to be strengthened by the recent operationalisation of the India-UK Comprehensive Economic and Trade Agreement and progress in other bilateral trade agreements.Published on July 22, 2026
