Page 8 - Banking Finance March 2025

RBI CORNER

Mandatory for banks to

offer customer fixed inter-
est rate product: RBI's

FAQs

The RBI said it is mandatory for banks
to offer fixed interest rate product in
all equated instalment based personal Ò»©­
loan categories.
The FAQs on 'Reset of Floating Interest
Rate on Equated Monthly Instalments
(EMI) based Personal Loans' (August
2023) also said the circular covers all
equated instalment based personal PNB shares in focus after reporting Rs 270 crore
loans, irrespective of whether the inter- borrowal fraud to RBI
est rate is linked to an external bench-
The shares of Punjab National Bank (PNB) may remain in focus, February
mark or an internal benchmark.
19, after the company informed that a borrowal fraud amounting to Rs
At the time of sanction of loans, 270.57 crore has been reported in one of its non-performing asset (NPA)
annualised rate of interest/ annual accounts to the Reserve Bank of India (RBI).
percentage rate (APR), as applicable,
"Borrowal Fraud of Rs. 270.57 crore has been reported to RBI in NPA ac-
should be disclosed in the Key Fact
count of Mis Gupta Power Infrastructure Limited at BO: Bhubaneshwar,
Statement (KFS) and the loan agree-
Station Square, CO: Bhubaneshwar, ZO: Bhubaneshwar. The Bank has al-
ment, the FAQs said when and at what
ready made provisions amounting to Rs. 270.57 crore, as per prescribed
frequency should banks and other
prudential norms," said the company in an exchange filing.
regulated entities (REs) communicate
with the borrower.
During the tenure of the loan, any in- rate as per their board approved policy swaps. In addition, the central bank
crease in the EMI/tenor on account of at the time of reset of interest rates. conducted screen-based OMOs for Rs.
the external benchmark rate should be 59,000 crore.
communicated. RBI lets funds flow to
Each such auction saw bids higher than
The quarterly statements should be tackle liquidity deficit the notified amount, suggesting de-
provided disclosing at the minimum, mand for durable liquidity.
The Reserve Bank of India has sup-
the principal and interest recovered till
ported liquidity to its full extent Most institutions, however, have fac-
date, EMI amount, number of EMIs left
through long-term variable rate repo tored in more such liquidity measures
and annualised rate of interest for the
(VRR) auctions, foreign exchange throughout the first half of 2025.
tenor of the loan.
swaps and doubling down on its open "We expect more OMOs in primary/
Regulated entities (REs), the FAQs said market operation (OMO) purchases in secondary markets, VRRs and foreign
have to mandatorily offer fixed inter- its auctions and on screen. exchange swaps, especially as the
est rate product in all equated instal-
Since January 30, the RBI has taken RBI's forward book is heavy with large
ment based personal loan categories.
measures to infuse durable liquidity via near-term maturity," Madhavi Arora,
REs has to provide the option to the various OMOs and VRRs, in addition to chief economist at Emkay Global Finan-
borrowers to switch over to a fixed Rs. 43,000 crore via foreign exchange cial Services, said in a report.

8 | 2025 | MARCH | BANKING FINANCE