RBI changes rules on Base Rate
- Banks can review their base rate calculation method every three years instead of the earlier- specified five.
- Banks can review base rate every quarter
- Banks must take the interest rate of that tenure of deposits which has the highest share in total deposit base.
- Banks must have board approved policy on spreads charged to customers over the base rate.
- Any differentiation in spreads must be in consistence with credit pricing policy of the bank.
- Spread charged to existing borrower must not increase except when the credit risk profile weakens or loan tenure changes
- The change in tenor premium should not be borrower specific or loan class specific. It will be uniform for all types of loans for a given residual tenor.