The above chart includes all banks, including foreign banks whose lending rates tend to be lower. Looking at just Indian banks, here’s the situation:
A few quick observations:
Everyone pushed rates up immediately as RBI increased the Repo rate.
On the way down, though, most banks have dithered, with only tiny decreases in their base rates.
Private banks seem to hve responded better than public sector banks (though SBI is a big exception)
Lastly, notice that the corridor between 8 and 9.5% is totally empty. In this rate corridor, much of the shorter term lending (less than 1 year) trades in the Commercial Paper market. Good companies even see long term bonds in this range (For example, a Sterlite 2023 bond today traded at 9.15%) So for corporates, it makes a lot more sense to issue CP or bonds than wait for banks to bring down their lending rates. Should this change happen significantly, we’ll see banks react immediately.