Current Affairs · Bank Lending Rates
Regarding the interest rate dynamics and the structural composition of bank credit as observed in the Quarterly Basic Statistical Return (BSR-1) for December 2025, which of the following statements best describes the impact of the decline in lending rates on the outstanding credit portfolio?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The Weighted Average Lending Rate on outstanding bank credit fell to 9.35%, leading to a significant structural shift where loans with interest rates below 9% accounted for 62.4% of the total credit, up from 42.2% in the previous year.✓
- 2While the Weighted Average Lending Rate declined to 9.35%, the majority of outstanding credit remained concentrated in high-interest brackets exceeding 12% due to persistent risk premiums in the personal loan segment.
- 3The decline in the Weighted Average Lending Rate to 10.19% resulted in a marginal increase in low-interest loans, though metropolitan branches continued to exhibit significantly higher borrowing costs compared to rural areas.
- 4Despite the easing of policy rates, the share of loans with interest rates below 9% contracted from 62.4% to 42.2%, reflecting a cautious approach by Public Sector Banks toward long-tenure industrial credit.
Correct answer
The Weighted Average Lending Rate on outstanding bank credit fell to 9.35%, leading to a significant structural shift where loans with interest rates below 9% accounted for 62.4% of the total credit, up from 42.2% in the previous year.
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