RBI Governor Malhotra expects deposit rates to moderate along with lending rates
“When inflation is this low and going forward, you know (and) it will be low… then even though nominal interest rates seem low… real interest rates today are quite high. So this is not just for borrowers but also for savers. So we expect deposit rates to moderate to some extent, especially after the repo rate cut,” Malhotra said.
RBI data shows that a cumulative 100 basis point cut in the policy repo rate since February 2025 has led to a 105 basis point decline in the weighted average domestic term deposit rate (WADTDR). One basis point is 0.01 percentage point. WADTDR on fresh rupee term deposits of banks decreased to 5.57% in October 2025 from 5.61% in September 2025.
Low benchmark interest rates also had an impact on lending rates. The weighted average lending rate (WALR) of banks fell by 69 basis points for new rupee loans during February-October 2025, while outstanding rupee loans fell by 63 basis points.
“The transfer has been broad-based across sectors. On the deposit side, the weighted average domestic term deposit rate (WADTDR) on fresh deposits has fallen by 105 basis points, while the interest rate on outstanding deposits has softened by 32 basis points in the same period,” Governor Malhotra said in his policy statement.
Bankers said deposit interest rates were already moderate and the scope for further cuts appeared limited. Ashwini Kumar Tewari, general manager, corporate banking and subsidiaries, SBI, said, “Deposit rates have already come down and from our perspective, we also want to look after the interests of our depositors. Of course, our asset-liability committee will meet and decide, but the scope for further reduction in deposit rates is limited.”
