Public Banks Lag Private Rivals in Passing On Rate Cuts

The central bank cut its main interest rate by 125 points during this easing period.

Banks are expected to pass rate cuts on by lowering the rates they charge borrowers and pay depositors.

But those rates did not fall as much as the central bank’s rate.

Public sector banks passed on less of the cut on new loans than private and foreign banks did.

Deposit rates also fell by less than the repo rate.

In an earlier rate-cutting period, some lending and deposit rates fell more.

Strong demand for loans made banks compete harder for deposits.

Tight liquidity also helped keep market rates higher.