The repo rate transmission completion softened the loan yields on both Fresh and Outstanding Loans.As compared to the PSBs and as far as MCLR reductions are concerned Privat bans are on the top in the rate cuts.This results in private banks with a pressure on their NIMS , i.e. Net Interest Margins
Highlights
1. Fresh Loan Yields Mixed Trend
- Public Sector Banks (PSBs): Yields increased by 9 bps in February
- Private Sector Banks: Yields declined by 16 bps
- Overall system saw a net decline of 5 bps
2. Impact of RBI Rate Cut Visible
- Since the December 2025 rate cut by the Reserve Bank of India
- Fresh loan yields have fallen by 27 bps
- Indicates most repo-linked rate transmission is complete
3. Outstanding Loan Yields Also Declining
- Overall system: ↓ 4 bps in February
- PSBs: ↓ 1 bp
- Private Banks: ↓ 6 bps
- Shows gradual reduction in existing loan rates
4. Trend Since Dec 2025 Rate Cut
- PSBs: ↓ 18 bps
- Private Banks: ↓ 22 bps
- System-wide: ↓ 21 bps
- Confirms major repricing cycle is already done
5. Trend Since Dec 2025 Rate Cut
- Private banks reduced 1-year MCLR by 20–275 bps YoY
- PSBs reduced only 30–40 bps YoY
- Private banks are more aggressive in rate cuts
6. Pressure on Bank Margins
Falling lending yields indicate pressure on Net Interest Margins (NIMs), especially for private banks.
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