Now Reading: RBI proposes new loan interest rate rules; stricter norms for banks, NBFCs
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RBI proposes new loan interest rate rules; stricter norms for banks, NBFCs
RBI proposes new loan interest rate rules; stricter norms for banks, NBFCs
The Reserve Bank of India has released draft rules for a common framework on interest rates for all bank and NBFC loans. The new guidelines, proposed to take effect from April 1,…
The Story in Brief
The Reserve Bank of India has released draft rules for a common framework on interest rates for all bank and NBFC loans. The new guidelines, proposed to take effect from April 1, 2027, will require lenders to link all loan rates to an internal or external benchmark plus a risk-based spread. Floating-rate personal loans and MSME loans from commercial banks must use an external benchmark such as the repo rate or Treasury Bill yields. The spread on floating loans cannot be revised for three years except for changes in the borrower's credit profile.
Separately, from October 1, 2026, banks must offer the same fixed-deposit rates across all branches for deposits of the same amount on the same day. Banks must publish bulk deposit rates on their websites by 10 am every business day. The rules follow a controversy over HDFC Bank's reported Rs 45 crore marketing spend to secure bulk deposits from a state agency.
The Indian Opinion
The Reserve Bank is right to demand that banks print their deposit rates clearly and price loans only against a benchmark. But the Indian borrower has heard too many promises of transparency that ended as fine print. Real change will come on April 1, 2027, when a lender tries to sneak a spread revision before three years and the customer actually complains. The test is not the circular, but the ombudsman complaint rate a year after the rules come into force.
Sources (4): bfsi.economictimes.indiatimes.com, freepressjournal.in, rbi.org.in, bfsi.economictimes.indiatimes.com (2)
This story was synthesised by AI from the 4 sources linked above.
Updated: this story now draws on 4 sources.
