New Delhi, Aug. 17 -- Borrowers with floating-rate loans could get greater protection from changes in the benchmark used to determine their interest rate under a new framework proposed by the Reserve Bank of India (RBI). The draft says existing loans linked to internal or external benchmarks will have to be migrated to the proposed framework with the borrower's consent, without putting the borrower at a disadvantage.

The RBI has proposed the Reserve Bank of India (Interest Rates on Loans and Advances) Directions, 2026 to create a common framework for how banks and other regulated entities determine loan interest rates, benchmarks and spreads. If finalised, the directions are proposed to take effect from 1 April 2027.

For existing loans,...