How did the weighted average lending rate (WALR) on outstanding rupee loans of SCBs change from August to September 2024, in India?

The correct answer is Decreased from 9.91% to 9.90%.

Key Points

• The Weighted Average Lending Rate (WALR) on outstanding rupee loans of Scheduled Commercial Banks (SCBs) decreased from 9.91% in August 2024 to 9.90% in September 2024.
• WALR reflects the average interest rate at which banks lend to borrowers across various sectors.
• This minor decline in WALR indicates a slight easing in borrowing costs for customers during the specified period.
• The WALR is closely monitored by the Reserve Bank of India (RBI) as part of its monetary policy transmission mechanism.
• Such changes in WALR can impact credit demand and overall economic activity in the country.

Additional Information

• Weighted Average Lending Rate (WALR): It is an average interest rate calculated by weighing the interest rate on loans with the respective loan amounts.
• Monetary Policy Transmission: The process through which changes in the RBI's policy rates (such as the repo rate) are passed on to the broader economy, including lending and deposit rates.
• Scheduled Commercial Banks (SCBs): These are banks that are included in the Second Schedule of the RBI Act, 1934, and are permitted to operate banking business in India.
• RBI's Role: The Reserve Bank of India monitors WALR as part of its efforts to ensure effective transmission of monetary policy decisions to the real economy.
• Impact of WALR: Changes in WALR affect borrowing costs for businesses and individuals, influencing investment, consumption, and overall economic growth.