Bank Deposit Rates Fall as Fresh Lending Rates Rise in August
Indian banks saw a decline in deposit rates while fresh lending rates increased in August 2026, according to data cited by the Economic Times from the Reserve Bank of India (RBI). The movement indicates a change in banks’ pricing of deposits and new loans during the month, with implications for both savers and borrowers.
The data showed that the weighted average domestic term-deposit rate on fresh deposits declined by 9 basis points to 6.01% in August, from 6.10% in July. At the same time, the weighted average lending rate on fresh rupee loans increased by 8 basis points to 8.75%, compared with 8.67% in July. The movement suggests that banks were pricing new deposits and loans differently during the month.
For borrowers, higher fresh lending rates can increase the cost of newly sanctioned loans, although the impact depends on the type of loan and the applicable interest-rate structure. For depositors, lower rates on fresh term deposits can reduce the returns available when renewing or placing new deposits.
The data also provides an indication of how changes in monetary conditions are transmitted through the banking system. Banks continuously balance deposit mobilisation, lending demand, liquidity conditions and margins when determining their pricing. Changes in deposit and lending rates therefore have implications for banks’ funding costs, credit pricing and overall balance-sheet management.
Key Numbers
| Indicator | July 2026 | August 2026 | Change |
|---|---|---|---|
| Fresh domestic term-deposit rate | 6.10% | 6.01% | -9 bps |
| Fresh rupee lending rate | 8.67% | 8.75% | +8 bps |
The divergence between fresh deposit and lending rates is relevant to bank profitability and asset-liability management. Banks need to manage the relationship between the cost of raising deposits and the yield earned on new loans while also considering liquidity, credit risk and competitive pressures.
For customers, the August data highlights the importance of comparing current deposit and borrowing rates rather than relying solely on rates available when an existing product was opened. For banks, it reinforces the importance of pricing discipline and balance-sheet management as interest-rate conditions change.
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