State-owned Indian Bank said it has decided to link all new floating rate retail as well as MSME loans with the Reserve Bank of India’s (RBI) repo rate, effective October 1.

The RBI has mandated all banks to link their loans with external benchmarks, such as repo, aimed at faster transmission of rate cuts effected by it to consumers.

“In conformity with the RBI guidelines dated September 04, 2019, on External Benchmark Based Lending, the bank has decided to link all new floating rate loans to personal or retail segment and new floating rate loans to micro and small enterprises (MSE), to Reserve Bank of India policy Repo Rate with effect from October 1, 2019,” according to a BSE fling.

Several banks, including State Bank of India, have already announced to link their loan products with external benchmarks from next month.

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