Fall in interest rates: Which borrowers have gained the most?
The fall in interest rates in the last two and a half years has not benefited all borrowers equally. For starters, interest rates on credit card debt have actually gone up, as the accompanying chart shows. Rates have fallen the most on export credit, while they have hardly budged for agricultural credit.
The RBI Annual Report, from which the chart has been taken, says, ‘Transmission was asymmetric across sectors, reflecting varied credit conditions and risk appetite.’ The chart shows that interest rates to the personal housing sector are the lowest.
It is interesting that interest rates on loans to large industries or to infrastructure, which have been the main source of bad loans, have fallen more than on lending to agriculture or to medium and small enterprises (MSMEs).