Loans linked to the marginal cost of lending rate (MCLR) account for a larger portion of state-owned banks’ floating rate book than external benchmark-based lending rate (EBLR) loans.
PSU-bank loan books have seen a relatively modest expansion in yield as MCLR tends to increase gradually in line with the cost of deposits and the reset period of MCLR-linked loans is longer than that for EBLR-linked loans.
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Moreover, the one- to two-year bucket saw the sharpest increase in card rates on new term-deposit rates.