RBI Annual Report: 61% of Bank Loans Now EBLR-Linked
Why in the news
The RBI annual report showed loans moving to external benchmarks, aiding transparency.
| Measure | PSBs | Private banks |
|---|---|---|
| EBLR share of floating loans | 44.6% | 85.9% |
| MCLR and legacy loans | Higher | Minimal |
About EBLR
A floating rate tied to a public benchmark: the repo rate, a 3-month or 6-month Treasury Bill yield or another FBIL rate.
- Benchmark: from RBI or FBIL.
- Spread: fixed at origination.
- Risk premium: varies with borrower profile.
Significance
- Faster monetary policy transmission.
- PSBs need to speed up the MCLR-to-EBLR migration.
Exam angle
- Full forms: EBLR, MCLR.
- Publisher: FBIL.