Return on credit higher than return on banks surplus funds deployed with RBI: Brickwork Ratings

The Hindu Business Line | May 23, 2020 at 5:12 AM
  • The one-year return on credit that banks can earn by lending to corporates is high at about 8 per cent vis-à-vis the return of 3.35 per cent they will earn by parking their excess funds with the Reserve Bank of India (RBI).
  • As per BWR’s analysis, after taking into account the credit cost, based on defaults and recovery (Rs 24,898 crore), banks earn Rs 57,445 crore from deployed funds.
  • Simultaneously, the reverse repo rate (the interest rate banks earn on deploying surplus funds with RBI) came down from 3.75 per cent to 3.35 per cent.