RBI has asked banks to price all new loans sanctioned or renewed from April 2016 based on the Marginal Cost of Funds-based Lending Rate (MCLR). This move sweetens the one proposed in the draft prospectus where the entire loan book of banks was expected to shift to the new mechanism.
What the guidelines mean for a common man is that the change in interest rates made by the central bank will now be based on a scientific method rather than leaving the judgement to the bank management.
How banks will be impacted in the new lending rate regime | Business Standard News
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