Despite the fall in deposit rates, depositors have received positive real interest rates of close to 2 per cent in the second half of the 1990s, which is much higher than the real return on deposits during the first half of the 1990s. 2  BIS Review 1/2003  On the other hand, lending rates of banks have not come down as much.
While banks have reduced their prime lending rates (PLRs) to some extent and are also extending sub-PLR loans, effective lending rates continue to remain high (Table 1 and Graph 1). It is estimated that the average lending rate of scheduled commercial banks has declined from a peak of about 17 per cent in 1995-96 to about 14 per cent by 2001-02.