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Monetary Management and Financial Intermediation 129

NARCL. The government guarantee will be valid for 5 years. Guarantee available for these SRs
may be invoked on completion of resolution or liquidation as the case may be to cover the shortfall
between actual realization and face value of the asset. The guarantee amount will be issued based
on actual assets acquired by NARCL. This arrangement will not only safeguard the face value
of Security Receipts but it will also take away the need for 100 per cent upfront capitalization of
NARCL. The government will charge a guarantee fee on the amount which it guarantees, which
will increase annually to incentivize the early and timely resolution.

MONETARY TRANSMISSION – BANK LENDING AND
DEPOSIT RATES

4.23 RBI has reduced repo rate by 250 bps since February 2019 (the current easing cycle). The
Weighted Average Lending Rate (WALR) on fresh rupee loans declined by 197 basis points and
by 133 bps on outstanding loans during the period February 2019 to November 2021 (Figure
12). Large surplus systemic liquidity, forward guidance of continuing with the accommodative
stance and the external benchmark system for pricing of loans in select sectors aided monetary
transmission.

Figure 12: Weighted Average Lending Rates of SCBs

10.5
10.0
9.5

9.0
per cent 8.5
8.0
7.5
7.0

6.5
6.0
Jan-2019 Mar-2019 May-2019 July-2019 Sep-2019 Nov-2019 Jan-2020 Mar-2020 May-2020 July-2020 Sep-2020 Nov-2020 Jan-2021 Mar-2021 May-2021 July-2021 Sep-2021 Nov-2021

WALR- Fresh WALR- Outstanding

Source: RBI

4.24 During April-November 2021, the 1-year median Marginal Cost of funds-based
Lending Rate (MCLR) declined by 10 bps; Weighted Average Lending Rates (WALR)
on outstanding loans moderated by 19 bps, though it increased by 6 bps on fresh loans.
The Weighted Average Domestic Term Deposit Rate (WADTDR) on outstanding deposits
moderated by 24 bps (Table 4).