Banks have increased their spreads for repo-linked external benchmark loans, dampening the extent of transmission of the cumulative 125 bps repo rate cut into such loans.

This comes amid deposit rates turning sticky in the wake of higher interest rates being offered by small scale instruments (SSIs).

So, the increase in spreads (the mark-up charged over and above the policy repo rate) in the case of repo-linked external benchmark loans is aimed at protecting Banks’ net interest margins.

In the current easing cycle (up to February 2026), as against the 125 bps cut in the repo rate, the WALR (weighted average lending rate) on outstanding loans declined 87 basis points (bps). For fresh rupee loans, the WALR declined 89 bps, according to RBI’s latest monetary policy report (MPR).

The WADTDR (weighted average domestic term deposit rate) on outstanding deposits declined by 47 bps. For fresh deposits, the WADTDR declined by 97 bps.

The pass-through from policy rate changes to repo-linked external benchmark loans is one-to-one. But the same in the case of marginal cost of funds based lending rate (MCLR) linked loans and deposit rates happens with a lag.

Since February 2025, the RBI’s rate setting panel has cumulatively cut the repo rate (the interest rate at which the central bank provides liquidity to banks to overcome short-term mismatches) from 6.50 per cent to 5.25 per cent

Mark-up over repo rate rises

The spread on fresh rupee loans was the highest for education loans, followed by other personal loans, and MSME (micro, small and medium enterprise) loans for domestic banks, per the MPR.

The spread for MSME loans increased from 3.20 per cent in January 2025 to 3.29 per cent in February 2026.

For housing and vehicle loans, the spreads increased by 10 basis points each to 2.44 per cent (from 2.34 per cent in January 2025) and 3.17 per cent (3.07 per cent), respctively; for education loans and other personal loans the spreads increased by 21 bps (4.62 per cent) and 11 bps (to 3.47 per cent), respectively.

Sanjay Agarwal, Senior Director, CareEdge Ratings, said: “Due to sticky deposit rates and competitive pressures in high quality asset segments, banks have chosen to target relatively higher yield customers to protect their net interest margins (NIM). Hence, on book basis, the mark-up over external benchmarks has increased.”

However on y-o-y basis, overall spreads on fresh loans (lending rates minus deposit rates) have compressed by 13 bps, exhibiting challenges in re-pricing deposits to expected lower levels.

Agarwal opined that with significant increase in capital markets yields and overseas borrowings landed costs, the banks’ lending rates are expected to inch up in the near term, thereby halting the rate reduction process as on now.

Banking expert V Viswanathan observed that the effect of reduction in repo rate can be offset by Banks through revised spread for new loans to protect their profit margin in the wake of sticky deposit rates.

Published on April 14, 2026

India’s crude oil imports from Russia surged in March 2026, on a monthly basis, as State-run refiners more than doubled their purchases of the geo-politically sensitive commodity from Moscow.

According to Finland-based Centre for Research on Energy and Clean Air (CREA), Russia is heavily reliant on Asian markets to sell its oil with 90 per cent of its total exports of crude oil delivered to China and India in the first quarter of 2026.

“India’s imports of Russian crude oil doubled month-on-month. The biggest shift was in State-owned refineries’ imports from Russia, which saw a massive 148 per cent increase (m-o-m), presumably due to Russian barrels being more available in the spot market, which serve as their primary source of imports,” CREA pointed out.

According to global real time data and analytics provider Kpler, India roughly imported around 1.98 mb/d of crude oil from Russia in March compared to around 1 mb/d in February 2026.

India was the second-highest buyer of Russian fossil fuels in March 2026, importing a total of €5.8 billion of Russian hydrocarbons. Crude oil products constituted 91 per cent of India’s purchases, totalling €5.3 billion. Coal (€337 million) and oil products (€178.5 million) constituted the remainder of their monthly imports, CREA said.

While India’s total crude imports recorded a 4 per cent m-o-m reduction in March 2026, Russian imports doubled. The biggest shift was in state-owned refineries’ imports from Russia. Their imports were in fact 72 per cent higher than March 2025, presumably due to Russian barrels being more available in the spot market, which serves as the primary source of imports for them, it added.

The state-owned New Mangalore (Mangalore Refinery and Petrochemicals) and Visakhapatnam (Hindustan Petroleum Corporation) refineries had stopped Russian imports at the end of November 2025, but purchases resumed in March 2026.

Private refineries, meanwhile, registered a more modest 66 per cent month-on-month increase, but remained lower than the same time last year, it said.

Despite the EU’s ban on imports of oil products made from Russian crude on 21 January 2026, 14 shipments of oil products from refineries, including Indian, using Russian crude—and identified as high risk according to EU guidance—have unloaded at EU ports in the month of March, CREA said.

Nine of these shipments departed from Turkey’s refineries, four from India and one from Georgia. Some shipments from refineries running on Russian crude unloaded oil products at multiple European ports. France was the largest recipient of shipments from these refineries running on Russian crude, unloading four shipments in March, followed by Cyprus (three shipments), it added.

“Refineries in India, Turkiye, Brunei, and Georgia that use Russian crude exported €830 million of oil products to sanctioning countries in March 2026. The importers included the EU (€304 million), Australia (€332 million), and the US (€168 million). An estimated €188 million of these products were refined from Russian crude,” it pointed out.

The US’s imports came from the Jamnagar refinery in India and the STAR refinery in Turkiye, owned by SOCAR. In March, as much as 39 per cent of the STAR refinery and 25 per cent of Jamnagar refineries’ feedstock came from Russia, it added.

Published on April 14, 2026