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    Question

    RBI mandated use of external benchmarks for pricing of

    certain loans like retail and MSME loans. I n how many months is the interest rate to be reset at least once under the external benchmarking mechanism?  
    A One Correct Answer Incorrect Answer
    B Two Correct Answer Incorrect Answer
    C Three Correct Answer Incorrect Answer
    D Six Correct Answer Incorrect Answer
    E Nine Correct Answer Incorrect Answer

    Solution

    Banks are required to extend floating rate loans to Retail and MSME borrowers with reference to external benchmark lending rates only.    The external benchmarks that may be considered for loans are   

    • Reserve Bank of India policy Repo Rate or  
    • Government of India 3-Months and 6-Months Treasury Bill yields published by FBIL or   
    • a ny other benchmark market interest rate published by FBIL.   
    The periodicity of reset of interest shall be atleast once in three months .  

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