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Interest rates to be uniformly calculated of base rate by banks now

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To improve transparency and ensure speedier monetary policy transmission, the RBI today said that all banks will have to follow a new uniform methodology from the next fiscal for calculation of base rate on the basis of the marginal cost of funds.

The new methodology will ensure fair interest rates to borrowers as well as to banks.

As per the final guidelines, banks will fix their lending rates as per their marginal cost of funding every month, which will be based on the rate offered on new deposits.

Under the current system, banks fix their lending rates based on the average rate of outstanding deposits.

The RBI said all banks will follow a uniform methodology for calculation of base rate or minimum leadening rate on the basis of the marginal cost of funds from April 1, 2016.

“The guidelines are also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.

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