Fresh loan rates fall to 8.51% as deposit rates ease, RBI says

Banks' average rate on fresh rupee loans fell 10 basis points to 8.51% in September 2026, while fresh deposit rates eased to 5.61%, RBI data shows.

The average interest rate that banks charged on fresh rupee loans fell to 8.51% in September 2026 from 8.61% in August, a drop of 10 basis points, according to Reserve Bank of India data released on 30 October. The average rate on loans already on banks' books stayed at 8.96%. On the other side of the balance sheet, the average rate on fresh term deposits eased to 5.61% from 5.67%, and the rate on all outstanding term deposits dipped to 6.55% from 6.56%.

What the RBI reported

The RBI publishes these numbers each month as the weighted average lending rate (WALR) and the weighted average domestic term deposit rate (WADTDR). "Weighted average" means that a large loan counts for more than a small one, so the figure reflects where the money actually went rather than a simple average of the rates banks advertise. The figures cover scheduled commercial banks, excluding regional rural banks and small finance banks.

A point about naming: the release is titled "October 2026" because the data was received during October, but the rates it reports are for September 2026, compared with August 2026. Readers who see the October label should not mistake it for October's rates.

The four numbers tell a consistent story. Fresh loans got cheaper by 10 basis points, to 8.51%. Fresh deposits got cheaper by 6 basis points, to 5.61%. The stock of old loans did not move, at 8.96%, and the stock of old deposits barely moved, at 6.55% against 6.56%. A basis point is one hundredth of a percentage point, so 10 basis points is 0.10 percentage points.

Why fresh and outstanding rates move differently

The gap between the "fresh" and "outstanding" figures confuses many borrowers, so it is worth a plain explanation. A fresh rate is the average on loans sanctioned or deposits taken in the month. An outstanding rate is the average on everything on the books, including loans made years ago. A bank can change the rate on a new loan the day its costs change, but the old book reprices only as loans reach their reset dates, or as older loans are repaid and replaced by newer ones. That is why the stock figure hardly moves in a single month while the fresh figure can move by ten basis points.

The same logic applies to deposits. A bank that cuts its offer on a one-year deposit changes the fresh rate straight away, but depositors who locked in earlier rates keep earning them until their deposits mature. The outstanding deposit rate therefore changes slowly even when new deposits are priced lower.

Another way to read the data is the spread, the difference between what banks earn on loans and what they pay on deposits. On the outstanding books, 8.96% less 6.55% is 2.41 percentage points. On fresh business, 8.51% less 5.61% is 2.90 percentage points. These gaps are worked out here from the RBI's figures and are not a measure of bank profit, because they leave out costs, defaults and the share of funds that banks hold in non-interest-earning form.

What the release does not say

The RBI does not explain why the fresh lending rate fell, and we have not seen a bank or analyst explanation we can cite. Several things could be involved, including the mix of borrowers in the month, changes in banks' own funding costs and competition for new loans, but the release does not identify any of them. We also cannot say whether the 10 basis point move is the start of a trend, since one month of data does not settle the direction.

It is also worth putting the rate data beside the credit data released the same day, which is covered in a separate story. Bank credit grew 19.1% in September, much faster than a year earlier. Lending rates easing at the same time as lending speeds up is possible when banks compete for new customers, but the two releases are separate and the RBI does not link them.

What it means for readers

For someone taking a new home, car or personal loan, the fresh lending rate is the closer guide to market pricing, though a borrower's own rate depends on credit score, loan size and the bank. A fall of 10 basis points on the average is small. On a Rs 25 lakh loan over 20 years, it lowers the monthly instalment by about Rs 159, from about Rs 21,870 at 8.61% to about Rs 21,711 at 8.51%, or about Rs 38,000 over the full term. The simulator below lets you try your own loan.

For existing borrowers on floating-rate loans linked to an external benchmark, the stock figure of 8.96%, unchanged on the month, is the better comparison, because it reflects what the typical existing borrower pays. For savers, a fall of 6 basis points on fresh deposits means new fixed deposits are paying slightly less than a month earlier on average, while older deposits keep their rates until maturity.

Putting 10 basis points in rupees

Small percentages are easier to judge in rupees. A 10 basis point lower rate on a Rs 25 lakh loan means about Rs 2,500 less interest in the first year, before the loan balance starts to fall. On the deposit side, a 6 basis point lower rate on a Rs 1 lakh deposit means about Rs 60 less interest in a year. These are rough, first-year figures worked out here to give a sense of scale. They are not what any particular bank will charge or pay, since each bank sets its own rates and each borrower or depositor gets a rate based on their own case.

What we do not know yet

The release does not say how many loans were made at the fresh rate, so we cannot tell whether the fall came from cheaper pricing for everyone or from a shift in who borrowed in September. It also leaves out regional rural banks and small finance banks, which often serve smaller borrowers at higher rates, so the figures describe the larger banks only. Finally, one month's movement of 10 basis points is within the range of ordinary monthly changes, so we would wait for another month or two of data before calling it a trend.

What to watch next

The next RBI release on lending and deposit rates will show whether September's drop in the fresh lending rate carries into October. Watch the outstanding lending rate too: if it starts to fall, it means existing borrowers are beginning to benefit. Banks' September-quarter results will show how deposit and lending rate moves are affecting their margins, and the RBI's next policy review is the other place where interest-rate direction is set out.

Key takeaways

- The average rate on fresh rupee loans fell 10 basis points to 8.51% in September 2026, from 8.61% in August, according to the RBI. - The average rate on outstanding loans was unchanged at 8.96%, so existing borrowers saw no average change. - Fresh term deposit rates eased to 5.61% from 5.67%, and outstanding deposit rates were 6.55% against 6.56%. - A 10 basis point fall is worth about Rs 159 a month on an example loan of Rs 25 lakh over 20 years.

Sources

- [RBI: Lending and Deposit Rates of Scheduled Commercial Banks, October 2026](https://rbi.org.in/scripts/BSPressReleaseDisplay.aspx?prid=63894) - [Newsonair: Bank credit and interest rate trends for September show significant movements, RBI](https://newsonair.gov.in/bank-credit-and-interest-rate-trends-for-september-show-significant-movements-rbi/)

Tags: Lending rates RBI Bank deposits Interest rates EMI