When it comes to lowering lending rates, private Indian banks are far ahead of their public sector peers, as well as foreign banks. For the quarter ended September 31, 2002, private banks' lending rates for term loans dropped to 5 per cent in some cases.

In contrast, the term lending rate of state-owned banks dropped to 8.7 per cent and that of foreign banks to 6.2 per cent.

The Reserve Bank of India has for the first time collated data on lending rates. According to the RBI, the rates for 95 per cent of the term loans of private banks for the second quarter of 2002-03 ranged between 5 per cent and 19.5 per cent.

Private banks disbursed 60 per cent of their term loans at rates ranging between 6.5 per cent and 18 per cent.

The comparable figures for state-owned banks: 8.7-16.5 per cent for 95 per cent of their term loans. Incidentally, this range is also applicable to 60 per cent of the term loans disbursed by state-owned banks.

The lower end of foreign banks' term lending rates is lower than that of public sector banks at 6.2 per cent. But at the higher end, the rate is as high as 22.5 per cent.

In the case of working capital loans, the range of interest rates charged by public sector banks is 8.5-16 per cent for 60 per cent of their loans, that of foreign banks 6.4-25 per cent and that of private banks 6.4-18 per cent.

However, the median range of interest rates on advances over Rs 200,000 still remains high. For instance, the public sector banks disbursed 95 per cent of their term loans at 11.5-16 per cent and 60 per cent of their term loans at 12.25-14 per cent in September.

For foreign banks, the median rate for 95 per cent of their loans is 11.8-17 per cent. They disbursed 60 per cent of their term loans at 12.75-14.5 per cent.

The median range of term loan rates for private banks is 11.5-17 per cent for 95 per cent of their loans and 13.5-15 per cent for 60 per cent of their loans.

The lower end of the loan rates in the September quarter dropped substantially over the June quarter. In the case of public sector banks, the rate band dropped from 9.75-16.5 per cent to 8.7-16.5 per cent for term loans.

This was applicable to 60 per cent of their loans. For foreign banks, the lower end of the band dropped from 7.2 per cent to 6.57 per cent and for private banks from 6.75 per cent to 6.5 per cent.