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?
- 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.
- 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.
- 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
- 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 .
- 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.
- Further since Corporates are finding it cheaper to raise funds from Indian Debt market, the banks’ loan portfolio remained docile.
- 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.
- 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.
- Yields across ratings and maturities averaged at 8.65% in April 2019 according to CARE rating figures.