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Systematix Research Report
Based on the movement in lending and deposit rates in November 2021, public sector banks' proportion of eligible loans (floating-rate retail and micro, small and medium enterprise loans) on external benchmark based lending rate was significantly lower than that of private banks.
Since end-June 2021, private banks' spread has been at 182 basis points (versus 188 bps in the pre-pandemic time) due to their ability to underwrite unsecured loans, while the banking group's proportion of loans on EBLR has been much higher.
Meanwhile, public sector banks' spread contracted by 20 bps to 115 bps month-on-month (versus 131 bps in the pre-pandemic time) and it remains to be seen if they can maintain or improve this spread by switching eligible loans on EBLR.
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