PSBs flag deposit rate woes on policy eve

portfolios highly sensitive to policy moves.

- 

Existing deposit rates dipped by 31 bps since the Feb rate cut. MIN

About 63% of all floating-rate loans are linked to an external benchmark like the repo, resulting in a near-immediate transmission of policy rate changes. Deposits, however, are on fixed interest rates, and changes apply only to fresh ones.

PSBs have a higher proportion of floating loans linked to the marginal cost of funds-based lending rate. This benchmark is linked to deposit rates. In comparison, private sector banks have almost 88% of their floating loans tied to external benchmarks, impacting them more than state-owned peers.