RBI plans standardised loan pricing rules for greater transparency

The Reserve Bank of India plans to draft rules to standardise and harmonise loan pricing across regulated lenders to improve transparency and consumer protection, Governor Sanjay Malhotra said after the Monetary Policy Committee kept the repo rate unchanged at 5.25%, Livemint reported. The RBI will examine operational differences between the marginal cost of funds-based lending rate and external benchmark-linked lending rate systems, including day-count conventions and benchmark reset dates, and said draft directions will be issued shortly. Malhotra said the exercise is a rationalisation and should not be read as a change to loan repayments or equated monthly instalments. About 67.6% of bank loans currently follow the external benchmark system. Deputy Governor Shirish Chandra Murmu said the emphasis is on transparency and is conduct-related, and Malhotra said no major requirement has been proposed for non-banking financial companies or housing finance companies, which are not required to link their loans to RBI-mandated benchmarks.