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    Question

    As per RBI’s External Benchmark Based Lending

    framework, how frequently must the interest rate linked to an external benchmark be reset?
    A Once a year Correct Answer Incorrect Answer
    B Once every six months Correct Answer Incorrect Answer
    C Once every three months Correct Answer Incorrect Answer
    D Once every month Correct Answer Incorrect Answer
    E No specific frequency is prescribed Correct Answer Incorrect Answer

    Solution

    • RBI’s circular on External Benchmark Based Lending (EBLR) mandates that interest rates on floating rate loans linked to external benchmarks must be reset at least once every three months. • This ensures that lending rates move in tandem with market interest rate changes, providing transparency and faster transmission of monetary policy. • Example: If a loan is linked to the RBI repo rate, and repo changes, the loan interest rate must reflect this change within one quarter.

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