RBI Directs Banks to Link Loan Rates to External Benchmark

The Reserve Bank of India on 4th September, 2019, has made it mandatory for banks to link all new floating rate loans with an external benchmark from 1st October, 2019. Existing loans and credit limits linked to the Marginal Cost of Funds based Lending Rate (MCLR), Base Rate or Benchmark Prime Lending Rate (BPLR) should continue till repayment or renewal.

• Banks will have an option to benchmark the loans either to the RBI policy repo rate, Government of India three months or six months Treasury bill yields or any other benchmark market interest rate published by the Financial Benchmarks India Pvt. ....