JKB Financial Services Ltd.

As on : 13-Aug-2026

Economy - Reports
13-Aug-2026 11:34

RBI issues draft rules on harmonised interest rate determination

The Reserve Bank of India has released draft rules aimed at standardizing how interest rates are determined for both banks and non-banking finance companies (NBFCs). These rules are intended to ensure better monetary policy transmission, appropriate credit risk pricing, and fair treatment for borrowers. Currently, the regulatory framework regarding interest rates primarily applies to Commercial Banks, including Small Finance Banks and Local Area Banks, covering guidelines on internal and external benchmark-based lending for floating rate loans and the determination of spreads. Meanwhile, regulations for other regulated entities such as NBFCs and various rural and cooperative banks focus mainly on conduct-related issues. Notable inconsistencies have been noted among Commercial Banks' practices, particularly in determining the Marginal Cost of Funds-based Lending Rate (MCLR). The existing guidelines also address fixed rate loans minimally. Therefore, it is proposed to create unified Directions for all regulated entities that outline a principles-based framework for setting interest rates on both fixed and floating rate loans, tailored to their operational complexity and scale.

GET IN TOUCH