CONNECT WITH US
Fintech

Fintech

Private banks to see faster rate transmission as 91% of floating rate loans linked to EBLR

ET BFSI Fintech logo

Published on

Add as a preferred source on Google
Private banks to see faster rate transmission as 91% of floating rate loans linked to EBLR

Private banks to see faster rate transmission as 91% of floating rate loans linked to EBLR

Private sector banks are likely to see faster transmission of the Reserve Bank of India’s 25 basis point repo rate hike to 5.5 per cent, given their significantly higher share of externally benchmarked loans compared with public-sector banks, though the eventual earnings impact will also depend on deposit repricing.

90.75% of private banks’ floating-rate rupee loans linked to EBLR as of June 2026

EBLR-linked loans typically reprice within 1-3 months, while MCLR loans reset with a lag

Private banks could see quicker loan-yield transmission, but higher deposit costs could dilute the benefit

Private sector banks are likely to see the Reserve Bank of India ’s latest rate hike transmit to their loan books faster than public-sector banks , as a significantly larger proportion of their floating rate loans are linked to external benchmarks. RBI data showed that as of June 2026, 90.75 per cent of outstanding floating-rate rupee loans of private-sector banks were linked to external benchmarks, compared with 53.62 per cent for public-sector banks. For scheduled commercial banks as a whole, the EBLR (External Benchmark Linked Rate) linked share stood at 68.24 per cent. The distinction is important because loans linked to external benchmarks such as the repo rate typically reset faster following a policy rate change, while loans linked to the marginal cost of funds-based lending rate ( MCLR ) are repriced according to their respective reset periods. Advt

“The transmission for private banks will happen faster,” Bhalerao said, pointing to the higher share of EBLR-linked loans at private-sector banks.


Source link
Related Topics:Fintech

Disclaimer

We strive to uphold the highest ethical standards in all of our reporting and coverage. We TheMorningPulse.fyi want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It's possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.