From the first quarter of the new financial year i.e. 2021-22, customers will have to pay less interest if they take a loan from NBFCs and MFIs. Apart from the new customers, the old customers who have taken loans at floating rate from NBFCs will also get the benefit of this.
The Reserve Bank of India (RBI) has released a new average base rate. It is like a benchmark interest rate for NBFCs and Micro Finance Institutions (MFIs). This is the average base rate of the five major commercial banks of the country. The average base rate of these banks fell by 0.15 percent in the quarter ended March 31, 2021. It has come down from 7.96 percent to 7.81 percent. Within two years, the average base rate has decreased by 1.4 percent. On June 30, 2019, it was 9.21 percent.
The RBI releases this data at the end of every quarter. It serves as the benchmark rate for NBFCs and MFIs. NBFCs and MFIs give loans to customers in the next quarter at the same rate. Those who want to take any kind of loan from NBFCs and MFIs will get the benefit of reduced rate. As far as the existing customers are concerned, only those customers who have taken a loan at floating rate will get the benefit.
Generally, NBFCs and MFIs have higher interest rates. For this reason, the RBI decided to control their interest rates. That is why he issues an average base rate of 5 big commercial banks for them. This rate is like the benchmark rate for NBFCs and MFIs.
Till March 31, 2013, NBFCs were allowed to hold a 12 per cent margin. NBFCs used to keep this margin on the cost of the fund. Still small NBFCs are allowed to charge a 12 per cent margin on the cost of the fund. But for the large NBFCs, from April 1, 2014, the margin limit was fixed at 10 per cent. NBFCs with loan portfolios of more than Rs 100 crore come under the purview of large NBFCs.
