The Monetary Policy Report for October 2020 noted that the decline in both the lending and deposit rates is more pronounced for foreign banks.

"The transmission of policy repo rate changes to deposit and lending rates of banks improved since the April 2020 MPR (Monetary Policy Report). The weighted average lending rate (WALR) on fresh rupee loans declined by 91 bps since March 2020 in response to the reduction of 115 bps in the policy repo rate and comfortable liquidity conditions," it said.

"The pass-through to WALR on fresh rupee loans was higher than the softening of yield on 5-year corporate bonds (79 bps) and yield on 10-year G-Secs during March-August 2020. The WALR on outstanding rupee loans declined by 46 bps during this period, but this transmission is an improvement over the earlier period."

The report said that of the 105 basis point reduction in the weighted average domestic term deposit rate (WADTDR) on outstanding rupee deposits during the ongoing easing cycle (since February 2019), a little over half of the decline, 59 bps occurred since March 2020.

The one-year median marginal cost of funds-based lending rate (MCLR) charged by public sector banks and private sector banks declined further during the first half of the financial year 2020-21, it added.