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Systematix Institutional Equities
The evolutionary phase of banking system loan pricing mechanism (external benchmark linked lending rate, EBLR) progresses on the right trajectory enabling greater transparency. The RBI’s latest data prints on banks’ loan pricing on external benchmarks (Repo rate, MIBOR, OIS, T-bills and other yardsticks) indicate that higher proportion of loans were priced on above market-linked reference rates or RBI’s policy rate.
Of the total outstanding floating rates loans, 39.2% of the loans are priced on external benchmarks on Dec’21 (as compared to 28.5% on March’21). Proportion of loans priced on MCLR (marginal cost of funds-based lending rate) and Base rate further reduced to 53.1% & 5.3% on December 21 respectively (from 62.9% & 6.5% on March’21). The RBI’s datapoint doesn’t reveal incremental change in banking system’s loans bifurcation between fixed & floating rates loans. The loan bifurcation was at 74.9% / 23.4% on March’21 (from 74.2% / 24.2% on March’20).
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