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Come April, banks in India will have to link their floating rate retail loans and loans to micro and small enterprises to one of the four benchmarks – Reserve Bank of India’s (RBI) repo rate, the 91-day and 182-day treasury bills, any other benchmark market interest rate including overnight Mumbai interbank outright rate (Mibor), based on overnight call money rates, and even term Mibor with tenures of 14-day, one month and three months.
This will ring the death knell for MCLR or the marginal cost of fund-based lending rate, at least partially (it will continue to be used for other
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