MUMBAI: A recent data released by banking regulator shows that banks have fully passed on the benefits of lower rates to customers contrary to the claims made by the Reserve Bank of India ( RBI ). Commercial banks have lowered the benchmark lending rates by 110 basis points from April 2016 to September 2017 while in the same period the RBI lowered the policy rate - which is repo rate - by 50 basis points.This was indicated in a date released by the RBI on Tuesday and comes at a time when the banking regulator is looking at revamping the way banks price loans after expressing disappointment over them not passing the benefit of lower rates to borrowers.The RBI data shows that for all commercial banks the benchmark lending rates - MCLR or marginal cost of lending rate - was lowered from 9.50% in April 2016 to 8.40% in September 2017. This data pertains to MCLR with one year reset clause. Even the weighted average lending rates between April 2016 and August 2017 were down 64 basis point as against 50 bps cut in policy rates by RBI. "This shows that we are ahead of cycle and we have transmitted rates," said a bank chief who did not want to be named.During the same period, the RBI data shows that PSU banks reduced one-year MCLR by 110 bps from 9.50% to 8.40%, private banks have reduced rates by 85 bps from 9.80% to 8.95% and foreign bank lowered MCLR by 90 bps from 8.98% to 8.08%.

Source: Economic Times October 10, 2017 14:15 UTC