External Benchmark Based Lending – Medium Enterprises

RBI observed that subsequent to the introduction of an external benchmark system, the monetary policy transmission has improved in respect of the sectors where new floating rate loans have been linked to the external benchmarks.

In order to further strengthening monetary policy transmission, RBI has decided that all new floating rate loans to the Medium Enterprises extended by banks from April 01, 2020 shall be linked to the external benchmarks as indicated in the aforesaid circular. All the other instructions as contained in the aforesaid circular remain unchanged. 

Accordingly, Master Direction - Reserve Bank of India (Interest Rate on Advances) Directions, 2016 dated March 03, 2016 has been modified.