Banking Sector Update - Loan Switching To Augment Private Banks’ Margins: Systematix
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Systematix Research Report
The Reserve Bank of India mandated scheduled commercial banks to link all incremental floating rate loans (retail loans and micro and small enterprises loans) to the external benchmark lending rate (EBLR) regime in October 2019.
The regulator also mandated the linking of incremental fresh loans to medium enterprises to EBLR in April 2020.
At present, the cumulative credit composition of retail, medium and small enterprise (manufacturing and services) and medium enterprise is at ~36.9% of the total banking system credit.
Banking system-wide, 21.3% of total loans and ~57.8% of mandated loans are on EBLR as of March-21 (versus ~18.9% in March-20).
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