The Reserve Bank of India cut its repo rate from 6.50% to 5.25% between February and December 2025, and has kept it at 5.25% since. But a cut in the RBI’s policy rate does not automatically translate into an equal reduction in the rates banks charge borrowers or offer depositors.

So how much of that easing actually reached bank customers?

To find out, BasisPoint Insight looked at the RBI’s monthly data on lending and deposit rates from December 2023 to July 2026. The data cover four measures: the average rate on fresh loans, the average rate on outstanding loans, the average rate on fresh term deposits and the average rate on outstanding term deposits.

The numbers tell a fairly clear story through the rate-cut cycle. After the RBI stopped cutting, the picture became less straightforward.

Before Cuts: December 2023 to December 2024
The repo rate stayed at 6.50% throughout 2024. Over that period, bank lending rates were broadly stable. The average rate on fresh loans was 9.32% in December 2023 and 9.25% in December 2024. The average rate on outstanding loans was 9.85% and 9.87%, respectively.

Deposit rates moved somewhat more. The average rate on fresh term deposits rose from 6.49% to 6.57%, while the rate on outstanding term deposits rose from 6.83% to 7.00%.

With the repo rate unchanged, lending rates were broadly steady, while term-deposit rates continued to edge higher.

During Easing: December 2024 to December 2025
The RBI began cutting the repo rate in February 2025. By December, it had brought the rate down from 6.50% to 5.25%.

Bank rates also came down, although not in a straight line. The average rate on fresh loans fell from 9.25% in December 2024 to 8.28% in December 2025, a decline of 97 basis points. The average rate on outstanding loans fell from 9.87% to 9.06%, down 81 basis points.

Term-deposit rates also declined. The average rate on fresh term deposits fell from 6.57% to 5.67%, while the rate on outstanding term deposits fell from 7.00% to 6.68%.

The broad direction is therefore clear: lending and term-deposit rates fell during the RBI’s easing cycle.

But the monthly numbers also show why transmission cannot be reduced to a simple one-for-one calculation. After the first rate cut, for example, the average rate on fresh loans did not immediately fall; it rose from 9.32% in January to 9.40% in February 2025.

That does not mean the rate cut had no effect. The monthly figure is an average of loans sanctioned during the month and can also move as the mix of loans changes. The broader movement across the year is what matters: as the RBI cut the repo rate, bank lending and term-deposit rates generally moved lower.

After the Cuts: December 2025 to July 2026
The repo rate reached 5.25% in December 2025 and has stayed there. Bank rates, however, did not simply continue falling.

The average rate on fresh loans fell further after December, reaching 8.40% in March 2026. But the decline did not continue: the rate rose to 8.52% by July. Fresh-loan rates therefore did not sustain a downward trend once the repo rate had settled.

The average rate on outstanding loans behaved differently. It fell from 9.06% in December to 8.97% in July. Nine basis points is hardly dramatic, but the direction is interesting: the average rate on the outstanding loan book was still edging lower even though the repo rate had stopped falling.

There is an important limitation here. The outstanding-loan rate is a weighted average of the existing loan book. It can change because of repricing, but also because the composition of the book changes. The data therefore do not establish that individual existing loans were repriced by exactly nine basis points. They establish something narrower: the average rate on outstanding loans continued to decline.

Term deposits showed a similarly uneven pattern. The average rate on fresh term deposits was 5.67% in December 2025. It rose to 6.07% in March before declining to 5.90% in July. The average rate on outstanding term deposits moved from 6.68% in December to 6.58% in July. There was therefore no simple post-December pattern of continuously falling deposit rates.

These figures also need to be read correctly. They cover term deposits, not savings-account rates or all household deposits.

So what does this tell us about transmission?

The RBI’s 125-basis-point rate cut was not passed through as a uniform 125-basis-point reduction in bank rates. But the data clearly show substantial transmission during the easing cycle.

Between December 2024 and December 2025:

• the average rate on fresh loans fell 97 basis points;
• the average rate on outstanding loans fell 81 basis points;
• the average rate on fresh term deposits fell 90 basis points; and
• the average rate on outstanding term deposits fell 32 basis points.

Once the repo rate settled at 5.25%, fresh-loan rates stopped showing a sustained decline, while the average rate on outstanding loans continued to edge down. Fresh term-deposit rates fluctuated, while outstanding term-deposit rates declined modestly. The relationship between the repo rate and bank rates consequently became less straightforward.

However, there is a limit to what these numbers can tell us. The RBI data alone cannot establish why fresh-loan rates moved higher after March, why outstanding-loan rates continued to decline, or how much of these movements reflected banks’ funding costs, competition, changes in loan and deposit mix or individual pricing decisions. Nor can the averages tell us what happened to any particular borrower or depositor.

What the data show is transmission, but not a mechanical pass-through. Bank lending and term-deposit rates fell during the easing cycle, but their subsequent movements were less uniform after the repo rate stopped falling.