Foreign banks have seen a higher transmission of monetary easing in comparison to their domestic peers with regards to fresh and outstanding deposits and lending rates, as per the Reserve Bank of India's March bulletin released on Monday.
The data in the bulletin indicated that foreign banks had 1.06% of their monetary transmission from outstanding deposits between February 2025 and January 2026, when compared to 0.43% when it comes domestic private banks and 0.41% regarding public sector banks.
Monetary transmission on fresh deposits for foreign banks was 1.10% compared to 0.87%, It was 0.88% for private banks and public sector banks, respectively, the bulletin said.
When it came to lending, foreign banks in terms of transmission took the lead from their domestic peers with 1.11% on outstanding rupee loans against 0.88% in private banks and 0.76% for public sector banks.
When it came to fresh loans, the transmission was higher at 1.48% for foreign banks compared to 0.88% and 0.54% for private banks and public sector banks, respectively.
The central bank has so far reduced the repo rate by 1.25% since last year, with 0.25% each in the February and April monetary policies, 0.50% in the June policy, and 0.25% in the December policy. However, the central bank kept the rate unchanged in the August, October and February 2026 monetary policies.
ALSO READ: RBI Injects Rs 50,000 Crore Durable Liquidity In Banking System Via OMO Purchases
During the current easing cycle from February 2025 to January 2026, the weighted average lending rates of scheduled commercial banks (SCBs) on both fresh and outstanding rupee loans decreased by 0.66% and 0.83%, respectively, the RBI bulletin said.
On the deposit side, interest rates on fresh term deposits have also fallen; however, pass-through to interest rates on outstanding deposits has been moderate.
As of February 28, the total outstanding credit to the commercial sector rose by 14.7%, with non-bank sources registering a growth of 15.6%.
In January 2026, non-food bank credit growth was well spread out across sectors, though some easing has been observed in agriculture and industry.
Within industries, lending to micro, small and medium enterprises (MSMEs) continued to improve. Services sector credit growth sustained its momentum, driven by robust bank lending to NBFCs and commercial real estate, despite a moderation in credit growth to trade and professional services segments.
The growth in personal loans was led by housing, gold and vehicle segments, the RBI bulletin said.
(With PTI Inputs)
ALSO READ: RBI To Conduct Rs 1-Lakh-Crore Overnight Variable Rate Repo Auction On March 23
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.