Foreign banks have shown the strongest response to the Reserve Bank of India’s rate cuts in the current easing cycle, reducing both lending and deposit rates more aggressively than public and private sector banks, as per the RBI bulletin.
In its monthly report released on Wednesday, the RBI stated that between February 2025 and May 2026, scheduled commercial banks (SCBs) lowered repo-linked external benchmark-based lending rates (EBLR) and marginal cost of funds-based lending rates (MCLR). The transmission to new loan rates remained particularly strong in infrastructure and other sectors linked to EBLR.
The data also revealed that foreign banks reduced the weighted average lending rate (WALR) on fresh rupee loans by 1.24 percentage points, compared to 1.08 percentage points by private banks and 0.66 percentage points by public sector banks.
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