Why RBI's rate cut hasn't brought down your EMIs

Banks peg their loan rates to a benchmark (known as MCLR), which in turn is based on the cost of deposits. So, to cut the MCLR, they need to bring down deposit rates. But banks are struggling to raise deposits (against credit growth of 9.3%, bank deposits have been growing at only 6.1%) and are forced to offer high interest rates. SBI says it can’t cut rates as 'other banks are offering higher rates'.

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