Reserve Bank of India has asked banks to link the base rate with the marginal cost based fund (MCLR) loan rate from April 1. It is believed that the old home loan can be cheap by this step. MCLR Policy rates are more sensitive to signals. Due to its limitations of base rate arrangements, the Reserve Bank of India has approved MCLR from April 1, 2016.
The home loan before April 1, 2016 is based on the base rate, which the bank has been deciding on itself.After the demonatisation interest rates associated with M.C.L.R. coming downwards.In the statement, the Reserve Bank said, “After starting the MCLR system, it was hoped that the loan related to the existing base rate would also be transferred to this system.”The central bank said that it has been noticed that a large portion of the debt of banks is still attached to the base rate.The Reserve Bank has also expressed concern over the previous monetary review.
The central bank said that MCLR It is more sensitive to the signals of its policy rate, in such a case, it has been decided to add the base rate from April 1, 2018. Reserve Bank Deputy Governor NS Vishwanathan had said after monetary review that the central bank is worried about the lack of monetary policy movements to shift the base rate. Large number of accounts are still under the base rate system.
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