MUMBAI: The central bank proposed banks be allowed to reset interest on fixed-rate long-term loan productsinstead of charging a fixed rate throughout the tenure as it will be costlier for a borrower than floating rateloans.
Banks could reset interest rates after a period of 7-10 years, said a Reserve Bank of India panel's report on assessing feasibility of introducing more long-term fixed-rate loan products by banks on Tuesday.
"Till few years back, a majority of loans offered by the banks and financial institutions in India used to be in the nature of fixed-rate loan products. However, in recent times, retail loan portfolio of banks has become skewed in favour of floating rate loan products," the report said.
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