IFCI, a non-banking financial company, has announced movement to base rate regime that would act as a benchmark rate for all loan rates.
The move is similar to what banks have adopted. It had fixed its base rate at 12.70 per cent, and would not lend below the base rate, Malay Mukherjee, managing director and chief executive officer, said.
The rate, which takes into account cost of funds, overhead cost, margin and negative carry of debt servicing, would be reviewed every quarter, he added. Till date, IFCI never had a benchmark rate and loans were priced in accordance with State Bank of India's benchmark rate. Only banks are mandated by the Reserve Bank of India to have a base rate.
The move is similar to what banks have adopted. It had fixed its base rate at 12.70 per cent, and would not lend below the base rate, Malay Mukherjee, managing director and chief executive officer, said.
The rate, which takes into account cost of funds, overhead cost, margin and negative carry of debt servicing, would be reviewed every quarter, he added. Till date, IFCI never had a benchmark rate and loans were priced in accordance with State Bank of India's benchmark rate. Only banks are mandated by the Reserve Bank of India to have a base rate.
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