The Reserve Bank of India (RBI) vide its circulars no DBR.DIR.BC.No.14/13.03.00/2019-20 on “External Benchmark Based Lending” dated September 04, 2019 and circular no. DBR. Dir. No.85/13.03.00/2015-16 on “Interest Rate on Advances” dated March 03,2016 , updated as on September 04,2019 has advised to link all new floating rate personal or retail loans (housing, auto, etc.) and floating rate loans to Micro and Small Enterprises extended by banks with effect from October 01, 2019 to external benchmark which can be one of the following:
- Reserve Bank of India policy repo rate
- Government of India 3-Months Treasury Bill yield published by the Financial
Benchmarks India Private Ltd (FBIL)
- Government of India 6-Months Treasury Bill yield published by the FBIL
- Any other benchmark market interest rate published by the FBIL.
In line with the above circular, Axis Bank has adopted Repo rate as the external Benchmark lending rate with effect from October 01, 2019.