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RBI plans to structure loan rates of HFCs, NBFCs

The central bank is keen on greater transparency in the rate-setting process at non-banking financial companies (NBFCs) and housing finance companies (HFCs).

It is to be noted that the way banks set interest rates is critical for the smooth transmission of policy rates.

To make this process transparent, RBI has over the years directed banks to price their loans against their benchmark prime lending rate (BPLR), base rate and then MCLR.

However, this is the first time banks have been asked to link their lending rates to an external benchmark.

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