Neutral impactEconomy
Fresh re-deposit rates experience a notable drop this July
Economic Times 1 hr ago·1 Sept 2026, 1:56 am
The latest data shows that new term deposit rates in India have fallen slightly in July, while rates on existing deposits have stayed steady. This shift is largely due to banks facing lower liquidity as foreign banks increase their local borrowing. Consequently, lending rates on current loans have remained largely unchanged. However, the cost of new loans is set to rise in August, as the one-year average marginal cost of funds-based lending rate (MCLR) has increased. This hike is driven by foreign banks' higher borrowing costs.
For investors, this development signals a potential tightening of credit conditions in the near term. While stable deposit rates are good for savers, the upcoming rise in MCLR could make new loans more expensive for borrowers. This may eventually impact the demand for credit and influence the overall economic growth outlook. Investors should monitor the pace of these changes to gauge the broader monetary environment.
Excerpt from Economic Times
Fresh rupee term deposit rates saw a slight decrease in July. Outstanding rupee deposit rates, however, remained stable during the same period. Lending rates on outstanding rupee loans also showed little change in July. The one-year average marginal cost of funds-based lending rate increased in August. This rise was…Read the original at Economic Times
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