Notice for retail loan Customers

Benefit to customers:

This will ensure transparency, standardization & quicker transmission of rate benefits linked to the external benchmark i.e., RBI Repo Rate.
What will be the final rate applicable to the customer?

The rate offered to the customer will be RBI Repo Rate + spread.

The Repo rate will reset every three months as guided by Reserve Bank of India.

Spread refers to a fixed percentage that is predetermined by the bank and added to the RBI Repo rate to compute the effective interest rate.

Margin remains fixed for the entire term of the loan
Will the final rate for the customer increase?

At the time of migration, the effective rate for customer will remain the same. This will be handled by the spread adjustment.

For e.g., if the existing interest rate for customers is at 10% [MCLR→8% + Spread→2%], the rate will remain at 10% after conversion [EBR→4% + Spread→6%].

Therefore, there will be no change in the effective rate of interest as of now, during this migration process.

Subsequently, when the RBI Repo rate increases or decreases following the periodic RBI policy announcement, the applicable rate for customer will also increase or decrease accordingly.
Will RBI Repo Rate be same for the entire year or will it change?

Repo Rate is reviewed by the Reserve Bank of India from time to time and it may or may not change. Banks are required to reset their (lending) rates at least once in three months.
When will the Reset happen?

The rates will be reset every quarter as guided by the Reserve Bank of India. This has usually happened on the defined dates like 7th Jan, 7th April, 7th July & 7th Oct.
Are there any charges for conversion to external benchmark RBI Repo Rate?

No, there are Zero charges for conversion.

In case you have any queries, please do get in touch with your Branch Manager/Branch Officer