The RBI said the new framework aims to standardise rules for different entities to increase transparency and ensure uniformity. The new norms are unlikely to impact equated monthly instalments (EMIs) or bring non-banking finance companies (NBFCs) into the external benchmark-linked lending regime (EBLR) that applies to banks, the RBI said.
“The interest rate rule is to standardise different rules for different regulated entities. This will improve transparency because people will know what interest rates are and how they are set. So this is more of a rationalisation move which will improve consumer protection,” governor Sanjay Malhotra said in a post-policy press conference. The details of the new framework will be published in the draft guidelines, Malhotra said, adding that there will not be any major changes to the interest rate calculation structure for NBFCs, but only a “rationalisation” of the existing norms.
In the post-policy statement on developmental and regulatory policies, the RBI said the review will harmonise the guidelines across REs while maintaining proportionality. “(They will) address certain operational aspects of the current framework on MCLR (marginal cost of funds-based lending rate) and EBLR; and standardise certain divergent market practices concerning interest charging, including day-count convention and benchmark reset dates,” the RBI said.
The measures seek to ensure uniformity, enhance transparency in loan pricing, strengthen monetary transmission, and bolster consumer protection. Deputy governor Shirish Chandra Murmu said the emphasis is on transparency and conduct-related measures in the new framework.