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Mint
26-06-2025
- Business
- Mint
RBI asks all banks to ensure 50 bps rate cuts are passed on to customers swiftly
Weeks after slashing its repo rate by 50 basis points, the Reserve Bank of India in a report suggested that all banks should swiftly bring down their interest rates to ensure speedy transformation of the policy. According to an article published in the central bank's June bulletin, the RBI stressed that the financial conditions remained favourable for facilitating an efficient transmission of rate cuts by banks. It may be noted that since the RBI cut rates in February and April, most banks have passed down the same to their customers. SBI, Bank of Baroda, and HDFC Bank are among the lenders that have already passed on the benchmark lending rate-linked interest rate to borrowers by the same margin within days of the RBI cutting repo rate by a jumbo 50 bps on June 6. 'Financial conditions remained conducive to facilitate an efficient transmission of rate cuts to the credit market,' as per an article on 'State of the Economy' in the Reserve Bank's June 2025 Bulletin. The RBI had in June also announced a reduction in the cash reserve ratio (CRR) by 100 bps to 3 per cent of net demand and time liabilities (NDTL) in a staggered manner during the latter half of the year. The reduction in CRR would release primary liquidity of about ₹ 2.5 lakh crore into the banking system by December 2025. "Besides providing durable liquidity, it will reduce the cost of funds for banks, thereby facilitating monetary policy transmission to the credit market," the article added. The central bank, however, said that the views expressed in the Bulletin article are those of the authors and do not represent the views of the Reserve Bank of India. The article noted that the 50-bps cut in the policy repo rate during February-April 2025 reflected in banks' repo-linked external benchmark-based lending rates (EBLRs) and marginal cost of funds-based lending rate (MCLR). Consequently, the weighted average lending rate (WALR) on fresh and outstanding rupee loans of banks declined by 6 bps and 17 bps, respectively, during the period February-April 2025. On the deposit side, the weighted average domestic term deposit rates (WADTDRs) on fresh and outstanding deposits moderated by 27 bps and 1 bp, respectively, during the same period. According to the article, during the current easing cycle (February-April 2025), the decline in the WALR on fresh rupee loans was marginally higher for public sector banks (PSBs) as compared to private sector banks (PVBs). For outstanding loans, the transmission was higher for PVBs. In case of deposits, PSBs reduced their fresh term deposit rates by a higher magnitude as compared to PVBs.
Time of India
26-06-2025
- Business
- Time of India
All banks need to swiftly pass on 50-bps rate cut to customers: RBI Bulletin
The Reserve Bank of India has urged all banks to reduce their lending rates to support faster and more efficient transmission of recent policy rate cuts to borrowers, according to an article in its June 2025 Bulletin. The RBI had earlier this month cut the key repo rate by a sharp 50 basis points. The article, titled State of the Economy , stated that financial conditions remained favourable for an effective transmission of rate cuts into the credit market. "Financial conditions remained conducive to facilitate an efficient transmission of rate cuts to the credit market," the authors wrote. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like The Simple Morning Habit for a Flatter Belly After 50! Lulutox Undo Most banks have already passed on the earlier cuts from February and April to borrowers. Large lenders such as State Bank of India , Bank of Baroda and HDFC Bank had transmitted the 50 bps reduction in repo rate to their customers within days of the June 6 announcement, PTI said. The RBI had also reduced the cash reserve ratio (CRR) by 100 basis points to 3% of net demand and time liabilities (NDTL), with the cut to be implemented in a staggered manner through the latter half of the year. Live Events According to the article, the CRR reduction is expected to inject around ₹2.5 lakh crore of primary liquidity into the banking system by December 2025. "Besides providing durable liquidity, it will reduce the cost of funds for banks, thereby facilitating monetary policy transmission to the credit market," the authors wrote. The article clarified that the views expressed were those of the authors and not the official stance of the RBI. The article said that the 50-bps policy repo rate cuts between February and April had already reflected in banks' lending benchmarks, including external benchmark-based lending rates (EBLRs) and marginal cost of funds-based lending rates (MCLR). As a result, the weighted average lending rate (WALR) on fresh rupee loans fell by 6 basis points, while the WALR on outstanding rupee loans dropped by 17 basis points between February and April. On the deposit side, the weighted average domestic term deposit rates (WADTDRs) on fresh deposits fell by 27 basis points, while those on outstanding deposits saw a marginal decline of 1 basis point during the same period. The article further said that public sector banks (PSBs) had cut their WALR on fresh rupee loans by a slightly higher margin compared to private banks (PVBs). However, in the case of outstanding loans, the fall in WALR was greater for PVBs. Similarly, PSBs reduced their fresh term deposit rates more than PVBs did during this easing cycle, the article said. (with PTI inputs)
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Business Standard
25-06-2025
- Business
- Business Standard
Share of public sector banks in CD issuances rises to 69% in 2024: RBI
The share of public sector banks (PSBs) in issuing certificates of deposit (CDs) rose significantly from 2022 to 2024, while the share of private sector banks (PVBs) declined, according to a report in the RBI Bulletin. PSBs' share surged to 69 per cent in December 2024 from just 6 per cent in 2022, whereas PVBs' share fell to 30 per cent from 85 per cent during the same period. 'This contrasts with the general perception that CD issuance is largely dominated by private sector banks to supplement their current and savings account (CASA) deposits,' the report noted. Mutual funds have remained the primary investors in CDs, supported by increased retail participation in equity markets, which in turn led to greater asset allocation by mutual funds, the report added. Driven by strong credit growth outpacing deposit growth and tight liquidity conditions, banks have increasingly turned to CD issuances. In the fourth quarter of FY25, CD issuances surged to a record Rs 3.70 trillion. 'During Q4 FY25, CD issuances hit an all-time high of Rs 3.70 trillion, amid robust credit demand, liquidity deficit and sluggish deposit growth,' the report stated. It also noted that small finance banks (SFBs) had to offer relatively higher rates, whereas PSBs were able to raise funds at more competitive rates. Globally, banks and deposit-taking institutions are the primary issuers of CDs, while investors typically include mutual funds, pension funds, insurance companies and cash-rich non-financial corporations. CD issuances spiked in March due to tightened liquidity, as banks used CDs to address short-term funding needs at the fiscal year-end. Since April 2022, CD issuances have been on the rise, reaching Rs 1.17 trillion in March 2025. Total outstanding CD issuances climbed to a record Rs 11.75 trillion during FY2024–25. In September 2024, the average tenor of CD issuances dropped to 146 days, indicating that banks were raising funds for the short term while anticipating a fall in interest rates. This contrasts with the period from June 2019 to October 2021, when the average tenor increased from 95 days to 296 days, aligned with the start and peak of the interest rate easing cycle. However, by May 2022, when the central bank began raising policy rates, the average tenor had decreased to 128 days. During periods of rising interest rates, banks prefer locking in funds through longer tenor CDs. Conversely, in a rate-cutting cycle, longer tenor CDs are less attractive unless credit demand is particularly strong. 'Among various maturities, CDs issued for up to 91 days and those between 180 and 365 days dominate, highlighting their dual role as tools for short-term liquidity management and for locking short-term rates over longer horizons,' the report said.
India Gazette
23-06-2025
- Business
- India Gazette
Private banks increased market share in total deposits while PSBs loses 600 bps over 5 years: UBI Report
New Delhi [India], June 23 (ANI): Private banks in India have been steadily increasing their share in total bank deposits over the last five years, while public sector banks (PSBs) have witnessed a decline, according to data shared by Union Bank of India. The report highlighted that in March 2019, public sector banks held 63.2 per cent of the total bank deposits. However, by March 2025, their share fell to 56.3 per cent, a decline of around 600 basis points. It stated 'PVBs continue to increase market share in total deposits while PSBs lost approximately. 600 bps in share during the last 5 years' During the same period, private banks (PVBs) increased their share from 28.6 per cent to 34.8 per cent. The share of other banks remained almost stable, ranging between 8.1 per cent and 8.8 per cent. Private banks have seen higher growth in deposits than PSBs, even in rural and semi-urban areas, which were earlier considered strongholds of public sector banks. The report also said that absolute deposit accretion slowed in FY25, but PSBs managed to capture a higher share of the incremental market. There are clear regional differences in deposit patterns. In metro areas, the market share of private banks in total deposits is now nearly equal to that of PSBs. While PSBs still lead in CASA (Current Account Savings Account) deposits in rural and semi-urban regions, private banks are gradually increasing their share in these areas. Private banks have already captured a major share of CASA deposits in metro regions and are also gaining ground in urban centres. Private banks are growing faster in urban areas compared to PSBs. Although PSBs recorded higher growth in current accounts in metro regions, private banks had better overall deposit growth, mainly driven by term deposits. The report also pointed out that the CASA ratio of private banks is falling at a faster pace than that of PSBs across all regions. When it comes to year-on-year deposit growth, private banks continue to perform better. In March 2024, private banks saw the highest growth at 20.1 per cent, while PSBs posted a lower growth of 9.4 per cent. This trend continued in March 2025, with private banks recording 12 per cent growth, compared to 9.3 per cent for PSBs and 10.3 per cent for scheduled commercial banks (SCBs). This data indicated that private banks are attracting more deposits and steadily expanding their presence, while public sector banks are losing their earlier dominance in the Indian banking sector. (ANI)
Mint
23-06-2025
- Business
- Mint
Private banks increased market share in total deposits while PSBs loses 600 bps over 5 years: UBI Report
New Delhi [India], : Private banks in India have been steadily increasing their share in total bank deposits over the last five years, while public sector banks have witnessed a decline, according to data shared by Union Bank of India. The report highlighted that in March 2019, public sector banks held 63.2 per cent of the total bank deposits. However, by March 2025, their share fell to 56.3 per cent, a decline of around 600 basis points. It stated "PVBs continue to increase market share in total deposits while PSBs lost approximately. 600 bps in share during the last 5 years" During the same period, private banks increased their share from 28.6 per cent to 34.8 per cent. The share of other banks remained almost stable, ranging between 8.1 per cent and 8.8 per cent. Private banks have seen higher growth in deposits than PSBs, even in rural and semi-urban areas, which were earlier considered strongholds of public sector banks. The report also said that absolute deposit accretion slowed in FY25, but PSBs managed to capture a higher share of the incremental market. There are clear regional differences in deposit patterns. In metro areas, the market share of private banks in total deposits is now nearly equal to that of PSBs. While PSBs still lead in CASA deposits in rural and semi-urban regions, private banks are gradually increasing their share in these areas. Private banks have already captured a major share of CASA deposits in metro regions and are also gaining ground in urban centres. Private banks are growing faster in urban areas compared to PSBs. Although PSBs recorded higher growth in current accounts in metro regions, private banks had better overall deposit growth, mainly driven by term deposits. The report also pointed out that the CASA ratio of private banks is falling at a faster pace than that of PSBs across all regions. When it comes to year-on-year deposit growth, private banks continue to perform better. In March 2024, private banks saw the highest growth at 20.1 per cent, while PSBs posted a lower growth of 9.4 per cent. This trend continued in March 2025, with private banks recording 12 per cent growth, compared to 9.3 per cent for PSBs and 10.3 per cent for scheduled commercial banks . This data indicated that private banks are attracting more deposits and steadily expanding their presence, while public sector banks are losing their earlier dominance in the Indian banking sector. This article was generated from an automated news agency feed without modifications to text.
