Loan rates will come down

Over time, banks will be forced to either offer lower tenure fixed deposits or longer tenure floating deposits

For years, the Reserve Bank of India (RBI) has been nudging banks to reduce the interest rate on retail and micro, small and medium enterprise (MSME) loans. Finally, it has made it compulsory for banks to link all their floating rate loans to individuals and MSMEs to an external benchmark from October 1. The external benchmark can be the repo rate, or the three-month treasury bill rate, the six-month treasury bill rate, or any other benchmark market interest rate published by Financial Benchmark India Ltd. (FBIL). Currently, FBIL publishes at least 25 market-linked reference rates. 

Till now, banks have been reluctant