Despite cuts by RBI, lending rates increase

Economists at Bank of America Merrill Lynch said in a report that even though the RBI has cut rates by 110 bps since April, the weighted average lending rate has increased by 0.08% over the period. The organisation also noted that economic growth has dropped to a six-year-low of 5% in the June quarter and is expected to slip further with almost all key components of the economy contracting or falling since the first three months.

The country’s central bank has been blaming banks for the slower transmission of its policy cuts into their lending rates and continuously prodding them to cut more.