Skip to content
Free updates Login
BankingNABARD / RBI

NBFC Rate Transmission: RBI Bulletin Study on Repo Pass-Through

26 September 20251 min read
ECONOMYNBFC RateTransmission: RBIBulletin Study onRepo Pass-Through26 September 2025safalsetu.com

Why in the news

An RBI Bulletin paper studied how monetary policy reaches NBFCs, finding that transmission is only partial because of structural and market limits.

Key findings

  • Borrowing: NBFCs depend on banks and markets and have no direct LAF access; repo cuts do not quickly lower funding costs; larger, profitable firms borrow cheaper.
  • Lending: riskier borrowers mean rates react less to policy changes.
  • Pass-through over three quarters: 1% repo change leads to 0.24% in WABR and 0.33% in WALR.

Sector snapshot (December 2024)

  • GNPA 3.4%, NNPA 1.2%; industry plus retail make up 72% of credit.
  • Funding: markets 38.7%, banks 37.4%; ECB share rising (43% in FY25 against 27.2% in FY24).

Exam angle

  • WABR and WALR are weighted average borrowing and lending rates.

Test yourself

1. In the RBI Bulletin study, a 1% repo rate change shifted NBFC lending rates (WALR) by roughly how much over three quarters?

WALR changed by 0.33%; WABR by 0.24%.

2. According to the study, which facility can NBFCs not directly access?

The notes say NBFCs have no direct access to the LAF.

3. What was NBFC GNPA in December 2024 as per the RBI Bulletin study?

GNPA stood at 3.4% and NNPA at 1.2%.

This topic is part of Daily Current Affairs 25 & 26 September 2025 (15 topics).

All topics of the dayDay quizSeptember 2025

Read more