RBI proposes 3-month MCLR moving average and 3-month reset period
The Reserve Bank of India (RBI) is shaking up how banks set interest rates for floating-rate loans.
They're proposing that banks calculate the marginal cost component of MCLR using a three-month moving average, and that the reset period for MCLR-linked loans should not exceed three months.
This means your EMIs could reflect market changes more quickly, making things fairer and less confusing for borrowers.
Draft RBI rules require standard pricing
If these rules get approved, banks will also have to follow a standard method for adding risk and operating costs to loan rates.
The proposed directions are set to take effect from April 1, 2027, with existing loans linked to internal or external benchmarks being migrated to the prescribed interest-rate framework by April 1, 2029.
RBI is open to feedback on these draft rules, so if you care about how your future EMIs are calculated, now's the time to speak up!