Did banks do a good job of passing on RBI rate hikes? Here’s what the data show

An analysis of data on the transmission of RBI's rate hikes reveals that while some banks efficiently passed on the increased rates to borrowers, others lagged behind. The effectiveness of rate transmission varied significantly depending on the type of loan and the bank’s liquidity position. In sectors such as housing loans, the transmission was more efficient, whereas, for corporate lending, the impact was slower. The article suggests that the disparity is due to several factors, including the financial health of banks and market competition. Despite challenges, the central bank's rate hikes played a pivotal role in curbing inflation.