In May 2025, the weighted average lending rate (WALR) for fresh rupee loans given by scheduled commercial banks (SCBs) dropped to 9.20%, down from 9.26% in April. This small dip, as reported by the Reserve Bank of India (RBI), may not seem like much, but for people with loans — or those planning to take one — it could mean real savings.
What Is the Weighted Average Lending Rate?
The weighted average lending rate is the average interest rate banks charge customers for fresh loans. It shows the general trend of loan interest rates across the country. A lower WALR usually means lower EMIs for new borrowers.
Loans Getting Slightly Cheaper
Along with the fresh loan rate, the WALR on outstanding rupee loans also fell, from 9.70% in April to 9.69% in May 2025. While this change is small, it signals that banks may be starting to offer slightly cheaper credit — good news for home, car, and personal loan takers.
MCLR Is Also Moving Down
The 1-year median Marginal Cost of Funds based Lending Rate (MCLR) — a key factor in deciding interest rates — also cooled down to 8.90% in June 2025, from 8.95% in May.
This may not impact everyone, but it does hint at softening rates for those with MCLR-linked loans.
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EBLR vs MCLR: Where the Public Stands
By the end of March 2025, 61.6% of all floating rate rupee loans were linked to the External Benchmark Lending Rate (EBLR) — like the repo rate — while 34.9% were linked to MCLR.
This is important because EBLR-linked loans adjust quicker when the RBI changes rates. So if RBI cuts rates, your EBLR-based loan may get cheaper sooner than an MCLR-linked one.
Deposits Also Getting Less Attractive
For depositors, however, it’s a different story. The weighted average domestic term deposit rate (WADTDR) on fresh deposits fell to 6.11% in May, down from 6.34% in April. For existing deposits, the rate dipped slightly to 7.07% from 7.10%.
In short: Loans are getting cheaper, but deposit returns are shrinking.
What Does This Mean for You?
- Planning to take a loan? It could cost you a little less.
- Already have a floating-rate loan? You might see slightly lower EMIs.
- Have fixed deposits? Your returns may dip slightly.
While the drop in the weighted average lending rate isn’t massive, it points to a cooling-off phase in borrowing costs. This may be part of a larger trend if inflation stays under control and RBI holds or cuts rates.
Final Thoughts
For everyday Indians, a 0.06% dip may seem small — but over time and across large loans, it can make a difference. Stay alert to rate changes, especially if you’re considering big loans or investments. And if your loan is linked to an external benchmark, even better — you’re likely to feel the effect sooner.
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