Archive · 24 Jul 2025
RBI Article: Public Banks Reduced Rates More than Private Lenders
The Reserve Bank of India (RBI) cut a key interest rate (repo rate) between February and June 2025.
After these cuts, public sector banks (PSBs) lowered their loan and deposit interest rates more than private banks.
This means PSBs made loans cheaper and paid less interest on savings.
While interest rates went down, the amount of new loans being given out did not increase as much as expected.
Foreign banks also lowered their lending rates significantly during this period.
RBI article shows PSBs reduced lending and deposit rates more than private banks from February to May 2025.
PSBs lowered lending rates on fresh and outstanding loans by 31 bps and 17 bps, respectively.
Private banks reduced lending rates on fresh and outstanding loans by 20 bps and 15 bps, respectively.
Foreign banks reduced lending rates by 49 bps (fresh) and 52 bps (outstanding).
Credit growth has remained muted despite the reduction in repo rate.
- Who
- RBI, Public Sector Banks, Private Banks, and Foreign Banks
- What
- Banks adjusted interest rates in response to RBI repo rate cuts.
- When
- February to May 2025 (and February-June 2025)
- Where
- India
- Why
- To pass on the benefits of repo rate cuts to borrowers and depositors.
- Repo Rate Cut (Feb-May 2025)
- 50 bps
- Total Repo Rate Cut (Feb-June 2025)
- 100 bps
- PSB Lending Rate Reduction (Fresh Loans)
- 31 bps
- PSB Lending Rate Reduction (Outstanding Loans)
- 17 bps
- Private Bank Lending Reduction (Fresh Loans)
- 20 bps
- Private Bank Lending Reduction (Outstanding Loans)
- 15 bps
- Non-food bank credit growth (end of May 2025)
- 9.8%