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Interest rates on home, MSEs loans to be linked to external benchmarks

Dec 06, 2018 12:20 IST

The Reserve Bank of India on Wednesday announced that banks must set their floating interest rates on personal, home, auto, and MSEs loans to an external benchmark. RBI said that like repo rate or treasury yields the interest rates will be linked from April 1, 2019 and final guidelines will be released by the month end. Currently, banks price their loans against their marginal cost of funds-based lending rate. The central bank's move comes amid calls for greater transparency and standardisation of borrowers.

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