Monetary policy transmission in India under the base rate and MCLR regimes: a comparative study

The focus of the study is to estimate the degree of monetary policy pass-through to domestic banks’ lending rates during the latter half of the Base Rate regime (Q4:2012–13 to Q4:2015–16) and MCLR regime so far (Q1:2016–17 to Q2:2018–19).

Aggregate analysis

Before examining the passthrough of monetary policy to individual banks’ lending rates, we analyse the same at the aggregate level for the entire period under study. Here, we consider four variables, viz. the weighted average lending rate on fresh rupee loans sanctioned by domestic banks (WALRF)^{Footnote 4}, monetary policy…