All banks are now mandatorily required to link floating rate loans extended to retail and small business to the repo rate – the rate at which lenders borrow from the RBI – or to treasury bill rates from October 2019.
The move comes days after public sector banks announced a slew of repolinked loans after a nudge from finance minister Nirmala Sitharaman.

In a circular to all banks, RBI said floating rate loans for housing, auto and other personal advances as well as those advanced to micro and small enterprises have to be linked to one of three external benchmarks instead of the Marginal Cost of Lending Rate (MCLR). These three include RBI’s repo rate, three-month or six-month treasury bill yields, or any benchmark rate provided by Financial Benchmarks India (FBIL), a money market service provider which publish debt market rates.

All banks are now mandatorily required to link floating rate loans extended to retail and small business to the repo rate – the rate at which lenders borrow from the RBI – or to treasury bill rates from October 2019.
The move comes days after public sector banks announced a slew of repolinked loans after a nudge from finance minister Nirmala Sitharaman.

In a circular to all banks, RBI said floating rate loans for housing, auto and other personal advances as well as those advanced to micro and small enterprises have to be linked to one of three external benchmarks instead of the Marginal Cost of Lending Rate (MCLR). These three include RBI’s repo rate, three-month or six-month treasury bill yields, or any benchmark rate provided by Financial Benchmarks India (FBIL), a money market service provider which publish debt market rates.