The Reserve Bank of India (RBI) has released its latest monthly bulletin showing a rise in interest rates for both deposits and loans. Even though the RBI has been cutting the repo rate (the rate at which RBI lends to banks) by 125 basis points since February 2026, the market is seeing a hardening of rates. This means that instead of rates going down for customers, they are actually starting to climb back up due to high demand for loans.

Looking at the specific numbers, the Weighted Average Domestic Term Deposit Rate (WADTDR) on fresh deposits jumped by 16 basis points in June 2026. A basis point is a small unit of measurement equal to 0.01 per cent. This increase is much higher than the 4 basis point rise seen in May. For bank officers, this suggests that banks are competing harder to get fresh funds from the public to meet their lending needs.

On the lending side, the Weighted Average Lending Rate (WALR) on fresh Rupee loans went up by 2 basis points in June. Interestingly, the one-year Marginal Cost of Funds-based Lending Rate (MCLR) actually fell by 15 basis points in June. The MCLR is the minimum interest rate a bank can lend at, based on its internal costs. This decline shows a mixed signal in how banks are pricing their products compared to the overall market rates.

RBI Governor Sanjay Malhotra noted that the 'transmission' of rate cuts has slowed down. Transmission refers to how quickly a change in RBI policy rates reaches the end customer. Even though the RBI wants rates to be lower, the high demand for credit is keeping rates firm. Despite these rising costs, people and businesses are still borrowing heavily. As of late July 2026, credit growth was very strong at 19.3 per cent compared to the previous year.

The bulletin highlights that credit is flowing well into retail and service sectors. MSMEs (Micro, Small, and Medium Enterprises) and large industries are also borrowing more for their operations. Agriculture lending remains steady. This indicates that the Indian economy is active, and businesses are willing to pay higher interest to get capital for growth.

For bankers, there is a clear difference in how private and public sector banks are behaving. Private banks have been faster at passing on rate changes to their loan customers. Public sector banks, on the other hand, have shown a higher transmission when it comes to deposit rates. This means public sector banks might be paying more to depositors compared to their private counterparts during this cycle.

Moving forward, bank aspirants and staff should watch the credit-to-deposit ratio closely. With credit growing at 19.3 per cent and deposits growing at only 15.4 per cent, there is a gap. Banks will likely continue to raise deposit rates to attract more money so they can keep up with the high demand for new loans. This environment will test how banks manage their margins and liquidity in the coming months.