Banks ordered to calculate lending rate
Posted on: 02/Sep/2015 9:20:54 AM
All banks are ordered to calculate their base lending rate based on the marginal cost of funds instead of practicing to calculate as per the current practice of average cost. The order is given out by the Reserve Bank of India (RBI) and this will be in effect from 1st of April 2016.
RBI aims at making the lending rates sensitive to policy rates, states a circular on Tuesday. All the banks in the country have been reluctant to bringing down their lending rates claiming reason to be the high cost of funds in spite of three policy rate cuts by the RBI.
