Lending Rates Chat

Do You want to raise funds from Banks? Yes the lending rates of SCBs (Scheduled Commercial Banks) have fallen by 10 basic points in March 2019.  Why is it so?

  1. There was a drop in the rates of Public Sector Banks by 20 Basis points and also the deposit rates were more or less stable.
  2. On month on basis the rate was 9.7% in March led by the above stated 20 BPs drop in PSU Banks rate and the banks reduced the lending rates to NBFCs sector.
  3. Also an increase in fresh lending rates is not foreseen now, since banks now look for higher share of low yielding retail products and lending to better rated companies
  4. RBI data reveals that average deposit rates for SCBs in March was 6.9% flat over previous month. On year on basis it was higher by 20 BPs .
  5. Also Private Sector banks were operating at the end of financial year 2019 were operating on an average CD ratio of 90% which is said to be the highest in the decade.
  6. Further since Corporates are finding it cheaper to raise funds from Indian Debt market, the banks’ loan portfolio remained docile.
  7. Average yield in April this year has been lower than Marginal Cost of Lending Rate (MCLR), which is a rate below which banks cannot lend.
  8. The average MCLR for Scheduled Commercial Banks in April was around 8.74% which is 9 basis points higher than the average corporate bond yield.
  9. Yields across ratings and maturities averaged at 8.65% in April 2019 according to CARE rating figures.

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