India cenbank: banks must move to marginal cost for new base lending rate

September 1, 2015 11:11 AM

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MUMBAI, Sept 1 India's central bank has asked banks to calculate their base lending rates on the basis of the marginal cost of funds instead of the current practice of average cost and to implement the new rules by April 1, 2016.

The Reserve Bank of India wants banks' lending rates to be sensitive to policy rates, it said in a circular on draft base rate guidelines on Tuesday.

Also read: India cenbank says to withdraw temporary cash reserve ratio hike

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