Average Banking Sector Lending Rate Drops to 15.9% Amid Rising Credit Demand

On monetary developments, reserve money grew strongly by 29.7 percent, year-on-year, in August 2026, compared with 4.5 percent in August 2025.

The expansion was underpinned by growth in net domestic assets, mainly reflecting the impact of the policy change on reserve requirements.

However, net foreign assets declined, which helped moderate the overall growth in reserve money.

Broad money supply grew by 20.4 percent, year-on-year, in August 2026, up from 16.6 percent in August 2025.
Interest rates on Government’s short-term instruments moderated further in August 2026.

The 91-day Treasury bill rate declined to 5.4 percent from 10.3 percent a year earlier.

The average lending rate for the banking sector also declined to 15.9 percent from 24.2 percent over the same comparative period.

The low-interest rate environment, ease in credit stance by banks, and a pick-up in credit demand contributed to higher credit growth in the banking
sector.

Private sector credit growth rebounded to 35.5 percent in August 2026 from 13.3 percent in August 2025.

In real terms, private sector growth was 29.0 percent, relative to 1.7 percent over the same comparative period.