The Reserve Bank of India (RBI) announced that scheduled commercial banks (SCBs) reduced their benchmark lending rates in June 2026, with the one-year median Marginal Cost of Funds-based Lending Rate (MCLR) falling to 8.50 per cent. This marks a decline from 8.65 per cent recorded in May 2026, according to a statement released by the central bank.
Lending Rate Movements in May 2026
The RBI released data on lending and deposit rates of SCBs, excluding regional rural banks and small finance banks, for June 2026 on Tuesday. The data revealed that lending rates on both fresh and outstanding rupee loans experienced mixed movements across sectors during May 2026.
The weighted average lending rate (WALR) on fresh rupee loans of SCBs stood at 8.51 per cent in May 2026, marginally higher than 8.50 per cent in April 2026. In contrast, the WALR on outstanding rupee loans declined slightly to 8.97 per cent from 8.98 per cent over the same period.
Shift Towards External Benchmark-Linked Lending
The data also highlighted a continued shift towards external benchmark-linked lending. The share of External Benchmark-based Lending Rate (EBLR)-linked loans in total outstanding floating-rate rupee loans of SCBs rose to 67.6 per cent at the end of March 2026, up from 65.5 per cent at the end of December 2025. Meanwhile, MCLR-linked loans accounted for 30.2 per cent, down from 32.0 per cent at the end of December 2025, according to the RBI release.
Deposit Rate Trends
On the deposit side, the weighted average domestic term deposit rate (WADTDR) on fresh rupee term deposits increased to 5.84 per cent in May 2026, compared with 5.79 per cent in April 2026. However, the WADTDR on outstanding rupee term deposits of SCBs moderated to 6.57 per cent in May 2026 from 6.59 per cent in April 2026, as per the RBI data.
The RBI said, "One-year median Marginal Cost of Funds based Lending Rate (MCLR) of SCBs stood at 8.50 per cent in June 2026 (8.65 per cent in May 2026)." This reduction in MCLR is expected to make loans cheaper for borrowers, potentially boosting credit demand.
