The Reserve Bank of India has proposed a comprehensive rationalisation of the regulatory framework governing interest rates across all regulated entities.
The central bank stated that the changes are designed to improve transparency in loan pricing and strengthen the transmission of monetary policy to the real economy.
The proposal marks a significant step in the RBI's ongoing effort to modernise India's financial infrastructure.
By streamlining the rules that dictate how interest rates are set and communicated, the regulator seeks to reduce complexity for both lenders and borrowers.
This move is expected to enhance consumer protection by making the cost of credit more visible and comparable across different financial institutions.
This development follows the RBI's 2019 directive for banks to switch from the Marginal Cost of Funds based Lending Rate (MCLR) framework to external benchmarks, such as the repo rate.