Floating rates: Arbitrary and discriminatory

Floaters are also applicable to educational loans, auto loans, and small SME loans

I have explained over three previous pieces how banks, aided by a hands-off Reserve Bank of India (RBI), are giving a raw deal to those who have taken home loans. My focus in those pieces was to explain how “floating rates” are a sham. Last week I was chatting with K C Chakrabarty, former chairman of Punjab National Bank and former deputy governor of the RBI. He explained to me that the way the floating rate regime was being implemented was non-transparent and discriminatory. “In a floating rate system, the bank’s interest rate fluctuates with the floating reference rate. Now