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Reform floating rates

Pegging interest rates to external benchmarks is the way forward

Business Standard Editorial Comment 

A committee that had been tasked by the Reserve Bank of India (RBI) to look into banks’ loan charges has suggested that floating interest rates for home and personal loans be linked to an external indicator such as the RBI’s repo rate, the treasury bill rate or the interest rate on certificates of loan deposits. This would be an important step towards transparency, especially for borrowers, and the RBI should implement it as soon as possible. The committee, headed by Janak Raj, has also suggested that bank charges for converting loans to different interest rates following a ...

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First Published: Thu, October 05 2017. 22:44 IST
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