Transparency in Lending Loans Under Floating Rate Scheme

Reserve Bank of India (RBI) guidelines provide that Banks should lend only at or above their Base Rate and exhibit information thereof at their branches and on websites. RBI has given freedom to banks to offer all categories of loans on fixed or floating rates, subject to conformity to their Asset-Liability Management (ALM) Guidelines. The methodology of computing the floating rates should be objective, transparent and mutually acceptable to counter parties. The Base Rate could also serve as the reference benchmark rate for floating rate loan products, apart from external market benchmark rates.

This information was given by the Minister of State for Finance, Smt. Nirmala Sitharaman in written reply to a question in Lok Sabha today.