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Biz Prior to April 2016, home loan lovers will get the benefit of reduced interest rates.

Delhi (Business Desk)Before April 2016, people who have taken home loans have been complaining that they do not get the benefit of decreasing interest rates, as this facility is applicable only on new loans. Reserve Bank of India (RBI) has decided this. RBI has written to the banks that the benefit of reducing interest rates can be given to old home loan customers. Work will begin on 1 April 2018.


It is known, before April 2016, home loan interest rates are decided by Besar. This decision was entirely used by the bank. The effect was that when RBI lowered the interest rates, the bank used to take full advantage and nothing was received to the customer.

After receiving complaints regarding this, the RBI created a new formula, which was based on the marginal cost of landing rate i.e. MCLR. There is a cost related to the cost of MCLR funds. In this way, since April 2016, the loan lenders benefited MCLR, but the old customers were being charged only at the base rate.


Now in its latest order, the RBI has asked all the banks to calculate the base rate of the old homool to MCLR. This work will be done from April 1, 2018. Detailed instructions will be forwarded to the banks till next week.




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Ajit Singh

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