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Thursday, 6 December 2018

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Banks will now have to fix their loan rates on a common benchmark basis

Banks will now have to fix their loan rates on a common benchmark basis



The home, car loan holders and small and medium enterprises will get relief from April next year, as whenever RBI will reduces interest rates following that banks will have to fix their loan rates on a common benchmark basis and they will have to keep that intact during the whole loan spread period.

Changes in spreads can only be made when there is a change in the credit risk profile of the customer. The RBI has announced to link all the new personal, retail and MSME loans with floating rate to any one of the four external benchmarks from April 1, 2019. These loans can be either through the RBI's policy Repo Rate or Financial Benchmarks India Private Limited, provided by the Government of India's 91 days Treasury Bill Yield or FIIL, 182 days Treasury Bill Yield Or link to any other benchmark market interest rate offered by FBIL. In this regard, the Final Guidelines will be issued by December end.

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