New Delhi, Feb 27 (KNN) The Reserve Bank of India (RBI) has notified banks to link all new floating rate loans given to medium enterprises with external benchmarks from April 1.

“With a view to further strengthening monetary policy transmission, it has now been 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,” RBI said in a circular issued on Wednesday.

In the last credit policy held on February 6, the apex bank had announced linkage of external bench-marking to medium enterprise loans. This announcement is an extension to earlier direction from RBI to link new floating rates to retail, micro and small enterprises (MSEs) to external benchmark, effective October 1, 2019.

According to the RBI, 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 external benchmarks.

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