RBI push to link loans to repo rate will not bring cheers to home-loan borrowers; banks have again found a way not to fall in line
If there was an expectation that the new repo-rate linked loan rate-setting mechanism will lower the EMI burden on borrowers, it has been proved wrong.
Teaser loans a rude shock for many homebuyers when interest rates shoot up; RBI right to decline SBI’s idea from Day One
Back in 2010, SBI had introduced teaser loans but rolled back after just a year following disapproval from the RBI.
RBI proposes floating interest rates on home, auto, MSE loans to be linked to new benchmarks from 1 April
In a bid to ensure greater transparency, the RBI on Wednesday proposed that floating interest rates on personal, home, auto and micro and small enterprises (MSEs) loans will linked to external benchmarks like repo rate or treasury yields, from 1 April next year.
It is not about the lending rate setting mechanism but about compliance by banks. They have always freely flouted rules under PLR, BPLR, MCLR and base rate systems
Rajan has had a tough time convincing banks to cut their lending rates taking the central bank’s rate signals
HDFC Bank has become the first bank to cut lending rate after the RBI cut the short-term lending rate by 0.25 percent on 19 March.