Page 507 - ES 2020-21_Volume-1-2 [28-01-21]

134 Economic Survey 2020-21 Volume 1

Figure 9: Spread between WALR (on outstanding loans) and repo rate

Source: RBI

4.28 Across bank groups, Private Sector Banks exhibited greater transmission in terms on fresh
loans, however Public Sector Banks exhibited greater transmission on outstanding loans for the
entire easing cycle. Private Sector Banks also reduced deposit rates (measured by WADTDR)
more than Public Sector Banks.

Table 5: Transmission across bank groups during easing cycles (bps)

February 2019 to November 2020 March 2020 to November 2020

WALR- WALR- WADTDR WALR- WALR- WADTDR
Outstanding Fresh loans Outstanding Fresh
loans loans loans

Public sector banks –94 –151 –108 –69 –68 –71

Private sector banks –59 –176 –149 –59 –134 –94

SCBs # –83 –165 –127 –67 –94 –81
Source: RBI
Note: #: Include public sector, private sector and foreign banks.
4.29 Apart from the reduction in term deposit rates, many banks also lowered their saving
deposit rates during the current easing cycle. The saving deposit rates of five major banks, which
ranged 3.25-3.5 per cent prior to the introduction of the external benchmark (in end September
2019), were placed at 2.7-3.0 per cent as on January 15, 2021. The flexible adjustment of saving
deposit rates bodes well for monetary transmission to lending rates.