had the highest weighted average lending rates
(WALR), followed by state-run banks
and foreign banks
during January-September 2020. Private banks
have possibly been lending mainly to lower-rated companies. State-run banks, playing it safe, have taken on higher-rated exposures, their bad loans being higher. The differential between private and state-run banks’ WALR plummeted to 54 basis points (bps) in September, from 134 bps in January, implying that private banks
turned risk-averse and moved up the ratings curve when lending. Except in February, only firms rated ‘AA-’ and above had access to the bond market at rates lower than the WALR. Companies rated ‘A+’ and below had to pay a higher rate in the bond market, relative to bank loans.