The Reserve Bank of India has unveiled draft guidelines aiming to unify interest rate adjustments across lenders, improve monetary policy effectiveness, and strengthen borrower safeguards, with feedback invited until September 11, 2026.
The Reserve Bank of India has moved to tighten and standardise the way banks and other regulated lenders set interest rates, in a draft rulebook designed to improve monetary policy transmission, price credit risk more accurately and strengthen borrower protection. The central bank published the proposed “Reserve Bank of India (Interest Rates on Loans and Advances) Directions, 2026” on Wednesday, following its developmental and regulatory policy statement of August 5, 2026.
Under the draft framework, all floating-rate loans would have to reset within a maximum of three months from April 1, 2027, a change that would make repricing more uniform across lenders. The Reserve Bank also wants the Marginal Cost of Funds Based Lending Rate, or MCLR, to be calculated using a three-month moving average of the weighted cost of fresh deposits and fresh borrowings. The central bank has invited comments through its Connect 2 Regulate portal and by email until September 11, 2026, before issuing final directions for each category of regulated entity.
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