Mumbai, August 12, 2026 (Yes Punjab News)
The Reserve Bank of India (RBI) on Wednesday proposed a harmonised framework for determining interest rates on fixed- and floating-rate loans, seeking public comments on draft rules aimed at improving transparency, uniformity and consumer protection.
The proposed RBI (Interest Rates on Loans and Advances) Directions, 2026 are scheduled to come into effect from April 1, 2027. The central bank has invited comments from the public and stakeholders until September 11 through its website or email.
The draft framework follows the RBI’s August 5 announcement that it would rationalise regulations governing interest rates on loans.
The proposed directions would cover commercial banks, non-banking financial companies (NBFCs), regional rural banks, urban and rural cooperative banks, all-India financial institutions and housing finance companies.
According to the RBI, the framework seeks to bring greater consistency to interest-rate practices across regulated lenders while retaining proportionality. It also aims to address operational issues under the existing marginal cost of funds-based lending rate (MCLR) and external benchmark-linked lending rate systems.
The draft further seeks to standardise differing practices followed by lenders in charging interest.
Under the proposed rules, lenders would be permitted to offer loans at either fixed or floating rates. In both cases, the lending rate would have to be linked to an internal or external benchmark along with a risk-based spread. Lenders would not be permitted to price loans below the applicable benchmark.
For floating-rate loans, lenders would have to clearly specify the benchmark, reset frequency and reset date in the loan agreement. The benchmark could be reset no more than once every three months.
Once established for a loan, the reset frequency would remain unchanged throughout its tenure, subject to specified exemptions for smaller cooperative banks, certain NBFCs and some urban cooperative banks.
For agricultural loans, the interest-rate reset period would be aligned with the crop season, although it would not be permitted to exceed 12 months.
The RBI said the proposed framework is intended to harmonise lending-rate regulations across different categories of regulated entities while addressing operational concerns and strengthening transparency for borrowers.
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