A recent press report said that in order to control the mispricing of risks and the lack of transparency in loan pricing, the RBI has planned to set a group to suggest ways to have a transparent and non-discriminatory regime.
The RBI has said that there are many chances of risk mispricing and lack of transparency, specially for floating rates loans and in sometimes the spread charged to a customer has been revised upward often during the tenure of the floating rate loan. It said that the existing borrowers are affected very much compared with new customers with the same credit rating.
RBI reports mentioned banks have to determine interest rates on advances with reference to the base rate by adding a spread reflecting product specific charges together with term premium and risk premium.
The regulator has decided to form a working group to look into existing norms and is likely to suggest required revisions, taking into account the best international practices and accounting standards.
Reports said that the restructuring guidelines last revised in August 2008, has facilitated both the lenders and borrowers during economic downturns. The RBI has also received requests from stakeholders to review the restructuring guidelines in the light of experience gained.