Since then, the RBI has introduced four benchmark lending rates for proper pricing of loans and transmission of rates. The RBI has now formed a committee to formulate market-determined benchmarks to ensure a better transmission of interest rates. The base rate included all those elements of the lending rate that are common across all categories of borrowers. While all categories of loans are required to be priced only with reference to the base rate, transmission of the RBI rate cuts moved at snail’s pace. The RBI is likely to come up with another benchmark lending rate for borrowers, speeding up the transmission of rate cuts to the customers.

Source: Indian Express August 07, 2017 20:11 UTC