Loan pricing via external benchmark likely soon Move will help consumers compare loans fairly The Reserve Bank of India pulled up lenders for keeping interest rates on loans at a higher level and said it would make another system to fix rates for such loans.The banking regulator expressed concern over base rate and marginal cost of funds-based lending rate (MCLR) and said these internal benchmarks have not improved monetary transmission. A new system using external benchmarks to price loans would be introduced, the RBI said. In its report, an internal RBI study group to review the working of the MCLR system has suggested switching over to the new system in a time-bound manner, so that better rates are available to borrowers. The report said banks should use three benchmarks — Treasury bill rate, certificate of deposit rate and RBI’s policy repo rate – for pricing loans. Against the current system of annual reset of interest rates, the panel recommended quarterly reset. All bo