EMI relief may be quicker from Oct as RBI changes loan rules
Home, car and personal loan repayment amounts are likely to reduce sooner after banks cut lending rates starting October. The Reserve Bank of India ( RBI ) has changed its rules, giving lenders more room to pass on rate benefits to customers. What has changed Under earlier rules, banks could not change certain parts of the loan spread (the components added over the benchmark rate) for at least three years. This slowed down reduction in the repo-linked lending rates . The RBI has removed this three-year lock-in. This means: Banks can reduce the non-credit-risk portion of the spread whenever they lower lending rates. Borrowers will no longer have to wait for years to feel the full impact of monetary policy cuts. Those with floating-rate loans will be the direct beneficiaries. Borrowers can choose The RBI has also continued a facility introduced last year. At the time of interest rate reset, borrowers on floating-rate loans can cho...