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RBI Looks to Introduce External Pricing for Loans
May 09, 2019
Reserve Bank of India has been collaborating with banks with the aim to set external benchmarks for loans. The central bank believes the benchmark would be practical and would make the cost of funds of banks more transparent. The external pricing would be linked to something liquid, like government bonds or 91-day Treasury Bill.
RBI is holding discussions with banks, but nothing concrete has developed until now. The central bank had proposed in December 2018 that the floating rate of loans should be linked to housing and automobile loans and micro and small borrowers to an external benchmark, like repo rate or any other interest rate published by the Financial Benchmark India Pvt Ltd.
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