The Reserve Bank's October 2026 Bulletin said the decline in fresh lending rates between February 2025 and March 2026 reflected both loan repricing and changes in credit composition. It also reported double-digit NBFC credit growth and improving asset quality through December 2025.
BKK Bureau, New Delhi | 24 October 2026 | 3:27 AM IST
The Reserve Bank of India has released its October 2026 Bulletin, covering monetary policy transmission, the performance of non-banking financial companies, macroeconomic conditions and the use of alternative data to estimate state-level economic activity. The monthly publication contains two speeches, four articles and current statistics.
One of the Bulletin’s studies found that the weighted average lending rate (WALR) on fresh loans issued by scheduled commercial banks declined by 93 basis points between February 2025 and March 2026, following a cumulative 125-basis-point reduction in the policy repo rate. The study attributed 80 basis points of the decline to the interest-rate effect and 13 basis points to the composition effect.
The RBI article examined whether changes in the aggregate WALR resulted from banks repricing existing lending categories or from shifts in the mix of loans across banks and sectors. Its findings indicate that both factors contributed to the movement in fresh lending rates. The study used an index-number framework based on bank- and sector-level lending rates and loan weights.
A separate review of the NBFC sector assessed performance up to the end of December 2025. According to the Bulletin, NBFC credit continued to grow at a double-digit year-on-year rate during the period. The share of bank borrowings in NBFC funding rose moderately, pointing to continued concentration in the sector’s funding profile.
The review also said that NBFC asset quality had continued to improve in recent years, as reflected in a consistent decline in non-performing asset ratios. In addition, a preliminary text-mining exercise found that selected NBFCs were increasingly focusing on artificial intelligence in customer and financial applications, governance and digital infrastructure, and data analytics.
The Bulletin’s State of the Economy article said India’s economy continued to show strength across high-frequency indicators covering industry and services. It reported that headline consumer price inflation edged up in September, with increases across food, fuel and core components. Double-digit growth in merchandise exports during the first six months of 2026-27 helped narrow the trade deficit, while foreign direct investment, external commercial borrowings and remittance flows strengthened in August.
The RBI also noted that strong inflows through the FCNR(B) swap window augmented foreign exchange reserves. At the global level, the article highlighted renewed geopolitical frictions in West Asia and supply-chain disruptions as sources of inflationary pressure, alongside elevated sovereign bond yields in advanced economies and concerns about fiscal sustainability and financial stability.
Another article explored whether satellite-based night-time light data and Google search behaviour could provide faster estimates of state-level economic activity. The framework was applied to Maharashtra, Karnataka and Gujarat, where the combined indicators improved the accuracy of quarterly gross state value added growth nowcasts compared with a single-variable approach.
The study said the method could support near-real-time monitoring of regional economies and help identify turning points and shocks earlier. It described the approach as scalable and capable of supplementing official statistical systems and high-frequency macroeconomic analysis. The RBI clarified that the views in the Bulletin’s articles are those of the authors and do not represent the views of the Reserve Bank.
Why it matters
The Bulletin provides a detailed snapshot of how monetary easing reached fresh bank borrowers, while its NBFC review highlights continued credit growth, funding concentration and improving asset quality. Its findings on alternative data also show how policymakers may supplement delayed state-level economic statistics with higher-frequency indicators.
Source: Reserve Bank of India
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