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Borrowing Norms & Interest Rate Framework

Regulatory guidelines on External Benchmark Lending Rates (EBLR), MCLR, Priority Sector Lending (PSL), and fair lending practices.

Official Policy Interest Rate Corridor

Benchmark Reference Rates Determined by the Monetary Policy Committee (MPC)

Policy Repo Rate5.25%Key Anchor Rate

SDF Rate5.00%Standing Deposit

MSF Rate5.50%Marginal Facility

Bank Rate5.50%Standard Discount

Mandatory External Benchmark: As per RBI circulars, all new floating-rate personal loans, retail loans, and loans to MSMEs extended by scheduled commercial banks must be linked to an External Benchmark (such as the RBI Policy Repo Rate).

Marginal Cost of Funds based Lending Rate (MCLR) Structure

Benchmark indicative bands across standard loan maturities

Tenor Benchmark	Prescribed Range	Reset Frequency	Target Segment
Overnight MCLR	7.80% - 8.00%	Daily / Monthly	Short-term liquidity advances
1 Month MCLR	8.05% - 8.20%	Monthly	Working capital credit lines
6 Month MCLR	8.30% - 8.50%	Half-Yearly	Commercial vehicle loans
1 Year MCLR	8.55% - 8.80%	Annual	Corporate & term financing

Priority Sector Lending (PSL) Targets

Statutory allocation guidelines for scheduled commercial banks

40% of ANBC

Total Priority Sector lending obligation for all domestic scheduled commercial banks.

18% Agriculture

Direct farm credit, agricultural infrastructure, and crop maintenance financing.

7.5% Micro-Enterprises

Dedicated allocation to Micro, Small and Medium Enterprises (MSMEs) under MUDRA and CGTMSE.

Fair Practices Code & Consumer Safeguards

Zero Prepayment Penalty: Banks are prohibited from levying foreclosure charges or pre-payment penalties on any floating-rate term loans sanctioned to individual borrowers.
Key Fact Statement (KFS): Every retail and MSME loan must provide a transparent KFS disclosing Annual Percentage Rate (APR) inclusive of all processing fees and charges.
Timely Release of Movable/Immovable Property Documents: Original property title documents must be returned within 30 days of full loan repayment.

EMI Benchmark Simulator

Principal Amount:₹5,00,000

₹50,000₹50,00,000

Interest Rate (p.a.):8.5%

5%18%

Tenure (Years):5 Years

1 Yr10 Yrs

Monthly EMI:₹10,258

Total Interest Payable:₹1,15,496

Total Payment:₹6,15,496

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Lending Grievance?

If your loan application or interest reset issue is not resolved by the lender within 30 days, register a complaint on the CMS portal.

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