RBI proposes external benchmark for floating-rate personal, retail, MSME loans
The Reserve Bank of India (RBI) is rolling out new draft rules to make borrowing fairer and more transparent.
If these go through, commercial banks will have to link floating-rate personal, retail, and MSME (micro, small, and medium enterprises) loans to an external benchmark.
NBFCs (nonbank financial companies) can decide whether they want in or not.
The aim? You'll know exactly how your loan rate is set, so no more confusing fine print.
RBI consultation until September 11 2026
RBI is asking for public feedback until September 11, 2026. If approved, the new rules kick in from April 1, 2027, and all existing loans must follow by April 1, 2029.
Lenders will need to spell out their benchmarks and reset schedules clearly.
There will also be an explicit ceiling on the annual percentage rate (APR) for small-value and microfinance loans to keep things fair.
Plus, the board-approved loan-pricing policy of regulated entities must be reviewed every year, so borrowers aren't left guessing about changes.