{"id":571,"date":"2019-09-06T22:53:18","date_gmt":"2019-09-06T22:53:18","guid":{"rendered":"https:\/\/jobbinghood.com\/finance\/2019\/09\/06\/borrowers-must-watch-for-this-even-as-rbi-mandates-banks-to-link-loans-with-external-benchmarks\/"},"modified":"2019-09-06T22:53:18","modified_gmt":"2019-09-06T22:53:18","slug":"borrowers-must-watch-for-this-even-as-rbi-mandates-banks-to-link-loans-with-external-benchmarks","status":"publish","type":"post","link":"https:\/\/jobbinghood.com\/magazine\/2019\/09\/06\/borrowers-must-watch-for-this-even-as-rbi-mandates-banks-to-link-loans-with-external-benchmarks\/","title":{"rendered":"Borrowers must watch for this even as RBI mandates banks to link loans with external benchmarks"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"article-image\">\n<figure><img fetchpriority=\"high\" decoding=\"async\" class=\"lazy lazy-hidden size-full wp-image-1696814\" src=\"http:\/\/www.financialexpress.com\/wp-content\/plugins\/a3-lazy-load\/assets\/images\/lazy_placeholder.gif\" data-lazy-type=\"image\" data-src=\"https:\/\/images.financialexpress.com\/2019\/09\/1-167.jpg\" alt=\"Rupee had settled at 72.12 against the US dollar on Wednesday.\" width=\"660\" height=\"440\" srcset=\"\" data-srcset=\"https:\/\/images.financialexpress.com\/2019\/09\/1-167.jpg 660w, https:\/\/images.financialexpress.com\/2019\/09\/1-167-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/09\/1-167-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/09\/1-167-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><noscript><img decoding=\"async\" class=\"size-full wp-image-1696814\" src=\"https:\/\/images.financialexpress.com\/2019\/09\/1-167.jpg\" alt=\"Rupee had settled at 72.12 against the US dollar on Wednesday.\" width=\"660\" height=\"440\" srcset=\"https:\/\/images.financialexpress.com\/2019\/09\/1-167.jpg 660w, https:\/\/images.financialexpress.com\/2019\/09\/1-167-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/09\/1-167-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/09\/1-167-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><\/noscript><span class=\"article-caption\">The RBI\u2019s recent circular has mandated the banks to link all the floating loans to retail customers and MSMEs to an external benchmark from October 1.<\/span><\/figure>\n<\/div>\n<p>Even as <a target=\"_blank\" href=\"http:\/\/www.financialexpress.com\/tag\/rbi\/\" rel=\"noopener noreferrer\">RBI<\/a> made it mandatory for banks to link all floating loans to external benchmark for better interest rate transmission, the borrowers may have something to be concerned about. The borrowers availing loans under the new regime should be ready for the frequent changes in the rates of the loans, a report said. The retail customers may now get cheaper loans in the current scenario of falling interest rates, but they may also face challenges as the rates rise, CARE Ratings said in a report. \u201cThe cost of increased interest rate volatility as the changes both lower\/ higher would be reflected much faster,\u201d it added. The housing loans segment which accounts for more than 13 per cent of the bank credit would be the most hit as it has a variable interest rate, the report noted. The other segments including vehicle or credit card loans generally have a fixed interest rate. \u201cThe banks NIMs could be squeezed to the extent of lag in lowering their deposit rates. The new dispensation could aggravate their asset-liability mismatch. Ideally both sides should be moved to similar benchmarks to ensure an appropriate operational environment,\u201d CARE Ratings added.<\/p>\n<p>The RBI\u2019s recent circular has mandated the banks to link all the floating loans to retail customers and MSMEs to an external benchmark from October 1. The external benchmark includes repo rate, government\u2019s treasury bill yields of 3-month and 6-month tenure published by FBIL and any other benchmark market interest rate published by FBIL.<\/p>\n<p><a href=\"https:\/\/www.financialexpress.com\/industry\/jail-term-heavy-fines-on-celebrities-for-misleading-ads-caits-demand-from-minister-paswan\/1697966\/\" target=\"_blank\" rel=\"noopener noreferrer\"><b>Also read: Jail term, heavy fines on celebrities for misleading ads: CAIT\u2019s demand from Minister Paswan<\/b><\/a><\/p>\n<p>A report released by Kotak Institutional Equities on Thursday said that the new rule may have a greater impact on large private and all the public sector banks as against lenders such as HDFC and IndusInd Bank. In the entire banking space, ICICI Bank and Axis Bank could take bigger impact owing to the nature of their loan books.<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from BSE and NSE and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">Income Tax Calculator<\/a>, know market\u2019s <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-gainers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Gainers<\/a>, <a href=\"http:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-losers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Losers<\/a> &amp; <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/equity-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Equity Funds<\/a>. Like us on <a href=\" https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\" https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>[ad_2]<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] The RBI\u2019s recent circular has mandated the banks to link all the floating loans to retail customers and MSMEs to an external benchmark from October 1. Even as RBI made it mandatory for banks to link all floating loans to external benchmark for better interest rate transmission, the borrowers may have something to be [&hellip;]<\/p>\n","protected":false},"author":348,"featured_media":572,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-571","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance"],"_links":{"self":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/571","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/users\/348"}],"replies":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/comments?post=571"}],"version-history":[{"count":0,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/571\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media\/572"}],"wp:attachment":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media?parent=571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/categories?post=571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/tags?post=571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}