Weighted call money rates ranged 5.68-6.47 per cent in the first ten days of June, against 6.03-6.55 per cent in May, around 5.79-6.44 per cent in April and 5.44-7.64 per cent in June last year.

Weighted Call Money Rates: June 2015- June 2016
Month Call Money Rates (%)
Jun-15 5.44-7.64
Jul-15 5.79-7.12
Aug-15 5.45-7.31
Sep-15 5.93-7.88
Oct-15 5.55-7.02
Nov-15 5.61-7.21
Dec-15 5.83-6.99
Jan-16 5.61-7.04
Feb-16 6.37-7.11
Mar-16 6.12-8.95
Apr-16 5.79-6.44
May-16 6.03-6.55
June 2016 (up to 10  June) 5.68-6.47

 

Policy repo rate stood at 6.5 per cent, reverse repo rate at 6 per cent and bank rate 7 per cent as of 10 May. CRR stood at 4 per cent. Base rate, below which banks are allowed to lend, ranged 9.30-9.70 per cent, whereas marginal cost of funds based overnight lending rate (MCLR) introduced by RBI since 1 April worked out to 8.95-9.15 per cent. Average interest rates on term deposits of more than one year maturity of major banks worked out to 7.00-7.50 per cent.

Base rate & MCLR

Unlike Base Rate which is minimum common for specific loan tenors, MCLR is different for loans with different tenors for generally prime borrowers. Tenor is the period after which the interest rate of a loan resets. Basically, the MCLR will be published by the banks each month. If you take a loan with a one year tenor in April 2016, then your interest rate will be reset in April 2017 according to the MCLR of that month. And MCLR is different for tenors of 1 month, 3 months, and 1 year and so on. All new loans taken after 1   April will be on MCLR basis, while loans taken earlier in base rate formats are given a choice of base rate or MCLR.

Trend in Lending & Deposit Rates
week ended Base Rate MCLR Term Depose Rate
Apr. 1 9.30/9.70 8.95/9.15 7.00/7.50
Apr. 8 9.30/9.70 8.95/9.15 7.00/7.50
Apr. 15 9.30/9.70 8.95/9.15 7.00/7.50
Apr. 22 9.30/9.70 8.95/9.15 7.00/8.00
Apr. 29 9.30/9.70 8.95/9.15 7.00/7.50
6-May 9.30/9.70 8.90/9.15 7.00/7.50
13-May 9.30/9.70 8.90/9.15 7.00/7.50
20-May 9.30/9.70 8.90/9.15 7.00/7.50
May 27 9.30/9.70 8.90/9.15 7.00/7.50
Jun. 3 9.30/9.70 8.90/9.15 7.00/7.50
Jun. 10 9.30/9.70 8.90/9.15 7.00/7.50

 

RBI has made its stand clear on MCLR in second monthly policy issued on 17 June by saying that RBI will shortly review the operation of the Marginal Cost Lending Rate framework to iron out any issues. The apex bank has advised banks to move to MCLR lending basis to ensure faster transmission of policy rate cuts to customers by banks. It was found that that the average lending rate has come down by only 30-35 bps, out of 125 bps policy repo cut has been passed on to customers by banks.

Yield on 10 year Central government security worked out to 7.48 per cent as of 10 June. Rupee depreciated against USD by 4.3 per cent, and 6 months premium against the currency worked out to at 6.43 per cent.

Commercial papers floated during the second fortnight of May involved interest rates ranging 6.75-12.77 per cent, against 7.08-13.29 per cent t in the first fortnight.

Certificates of Deposits issued nit fortnight ended 13 May, involved interest rates of 7.30-7.62 per cent, against 7.10-7.80 per cent on CD issued in the preceding fortnight ended 29 April.

 


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