INSUBCONTINENT EXCLUSIVE:
Reserve Bank of India reduces key rates
All banks will then have to align outstanding loans to a common benchmark and maintain the spread throughout its term, unless a change in
and MSMEs loans to one of the four suggested external benchmarks from FY19
The reference gauges include the RBI policy repo rate, the Government of India 91-day Treasury Bill yield produced by the Financial
Benchmarks India Private Ltd (FBIL), or the GoI 182-day Treasury Bill yield produced by the FBIL, or any other benchmark market interest
the lack of transparency in the process adopted by lenders to fix loan rates
They also believe that they do not benefit from cuts in broader interest rates.
An internal central bank study, chaired by Janak Raj, had
recommended that high-street banks use external benchmarks for their floating rate loans instead of the present system of internal
benchmarks, which include the prime lending rate, benchmark prime lending rate, base rate, and marginal cost of funds-based lending
Financial Sector Ratings, ICRA
bank profits, unless the lenders are able to raise floating rate deposits linked to external benchmarks.
