IOB decides to link Retail, MSME loans to repo rate
Mumbai, Sep 19 (KNN) Indian Overseas Bank has decided to offer Repo Linked Lending rate (RLLR) for the new loans sanctioned under retail segment like housing, vehicle, education, clean loans and Micro and Small enterprises w.e.f October, 1 2019.
According to RBI notification dated 4/9/2019, it is mandatory for banks to link all new floating rate personal or retail loans and floating rate loans to MSMEs to an external benchmark effective October 1, 2019.
The banks are free to choose one of the several benchmarks indicated in the circular. The banks are also free to choose their spread over the benchmark rate, subject to the condition that the credit risk premium may undergo change only when borrower’s credit assessment undergoes a substantial change, as agreed upon in the loan contract.
Following which, IOB has decided to link interest rates with Repo Rate for the above segment loans and the details of rates will be published w.e.f 1/10/2019. Hence, all the new loans under these category will be offered with RLLR only.