The Reserve Bank of India has issued a circular dated September 4, 2019, making it mandatory for all new floating rate loans from October 1, 2019, to be linked to an external benchmark. This applies to all floating rate retail and MSME loans. What does this mean for you if you are an existing borrower or plan to take a new loan? Before we jump on the new announcements, … [Read more...] about Home Loans from October 1, 2019, to be linked to External Benchmark
Reserve Bank of India has directed all scheduled commercial banks to shift to MCLR (Marginal Cost of Funds based Lending Rate). This means all new loans sanctioned on or after April 1, 2016 will be linked to MCLR. MCLR stands for marginal cost-based lending rate. Earlier, your loans were priced at a spread over the Base Rate. For instance, if the base rate was 9.5% p.a. and … [Read more...] about Decoding MCLR: Should you switch from Base Rate to MCLR?
A reader of this blog, Pradeep, highlighted an important issue about MCLR recently. He pointed out that the a few banks are increasing the spread in order to compensate for the reduction in MCLR. By doing this, they are able to keep the lending rate constant (for the new borrowers) despite the MCLR going down. I checked the home loan rates for male salaried borrower for ICICI … [Read more...] about Banks may not be passing MCLR cuts to new Home Loan Borrowers
Starting April 1 this year, all new floating rate loans moved to MCLR regime. MCLR stands for Marginal Cost of Funds based Lending Rate. Under MCLR regime, the lending rate is linked to borrowing cost (deposit rates) of the banks. Till March this year, floating rate loans were linked to base rate. Under base rate regime, banks could exercise a lot of discretion in setting … [Read more...] about 8 things to know about MCLR