With competition rather stiff for deposits, the central bank mandate might pressure net interest margins at high-street lenders.
The Reserve Bank of India (RBI) has made it mandatory for banks to link their loans to retail borrowers and micro, small and medium enterprises (MSMEs) to external interest rate benchmarks as the central bank seeks faster transmission of its rate action.
External benchmarks include repo (or the policy rate at which banks borrow short-term money from RBI), and treasury bills with three and six-month maturities. With competition rather stiff for deposits, the central bank mandate might pressure net interest margins at high-street lenders. Larger banks with significant share of current account and savings account deposits may be in a better position to mitigate the cost effect, analysts said.
ET brings you a rate table showing how top five banks by total asset value are charging retail loans and credit to MSMEs.
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