Reserve Bank of India (Commercial Banks – Interest Rates on Advances) Directions, 2025
UR
- Applies toCommercial banks
- StatusIn force
- IssuedNovember 28, 2025
- Amendmentsnone tracked
- Length27 points in 5 sections · 3 min read
The four dates on this rule
- PublishedNovember 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNovember 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Chapter I. Preliminary
1. Start date
These Directions took effect on the day RBI issued them.
BankPulse example. There is no gap here between issue and effect. The Directions come into effect immediately upon issuance. A bank cannot wait for a separate start date, because there is none.
2. In force at once
The rules took effect the day they were issued. There was no grace period.
3. Who is covered
This rule applies to commercial banks, called 'banks' here.
4. Meaning of Commercial Banks
Commercial Banks here means normal banks and SBI, not Small Finance or Payment Banks.
BankPulse example. The word banks on this page has a narrow meaning. It covers banking companies, the corresponding new banks and the State Bank of India. It leaves out small finance banks, payment banks and local area banks.
5. Foreign branches excluded
These Directions do not apply to foreign branches of Indian banks.
Chapter II. General guidelines
1. Fixed rate floor
Fixed rate loans under three years cannot be priced below the matching benchmark rate.
2. Board-approved loan pricing policy
The Board, or a Board committee it empowers, must approve the policy on interest rates on advances, including microfinance pricing.
3. Monthly interest charging
Banks must charge interest on all advances every month, not less often.
4. Microfinance pricing policy
The Board must approve a separate policy on how microfinance loans are priced.
5. FCNR(B) loans included
The interest rate rules also apply to loans given against FCNR(B) deposits.
Chapter III. Benchmark
Must know
1. The 30 per cent rule
The MCLR tenor follows the single largest maturity bucket holding more than 30 per cent of the funds.
2. When no bucket dominates
If no bucket crosses 30 per cent, the tenor follows the weighted average of the largest buckets together crossing it.
Do it
3. Monthly MCLR publication
The Board must review and publish the bank's MCLR every month.
4. External benchmark loans
Floating rate home, auto and MSME loans must be linked to an External Benchmark Rate.
5. One benchmark per category
A bank must use only one external benchmark within each loan category.
Background
6. Base Rate era
Base Rate was the benchmark for loans made between July 2010 and March 2016.
Chapter IV. Other aspects of lending rates
1. Risk premium protection
A bank cannot raise an existing borrower's risk premium without a real reason.
2. No negative spread
The spread components a bank charges a borrower cannot be negative.
3. Three-month reset rule
Interest rates linked to an external benchmark must reset at least once every three months.
4. Yearly MCLR reset
Banks must reset floating loan rates under MCLR once a year or sooner.
Chapter VII. Repeal and Other Provisions
Background
1. Older rules repealed
This document repeals RBI's earlier instructions on interest rates on advances for commercial banks.
2. Earlier repeals stand
Guidelines already repealed before these Directions stay repealed.
3. Old rules stay repealed
Rules repealed before this document was issued remain repealed.
4. Old actions preserved
Anything already done under the old rules stays governed by those old rules.
5. Approvals carried over
Approvals given under the cancelled rules are now treated as given under these rules.
6. Other laws still apply
These Directions add to other laws. They do not replace any of them.
7. RBI's reading final
RBI's interpretation of any part of these Directions is final and binding.
What RBI has fined people for under this rulebook
RBI has imposed 1 monetary penalty on this kind of lender. In each one its own stated reason names the subject of this rulebook. Each one links to the press release it was read from.
This tells you the rulebook RBI named. It does not tell you which of the points on this page was broken, because RBI does not say. Read the order itself before drawing any conclusion about your own bank.
These come from RBI press releases. The penalty tracker holds them all. It also lists the penalties we could not place on any rulebook, and the reason for each one.
The same subject for other kinds of institution
The same subject for other kinds of institution.
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