New Delhi, Aug. 27 -- The Reserve Bank of India (RBI) has proposed clearer rules for banks and non-banking financial companies (NBFCs) on loan spreads and annual percentage rates (APR) to enhance transparency in borrowing. The draft aims for a unified framework by 1 April 2027, allowing better comparison of loan costs, including a ceiling on APR for small loans to prevent borrowing costs from becoming unfairly high.

Revising the spread charged over benchmark rates on retail, personal and business loans, RBI's new framework aims to simplify loan comparisons for consumers while ensuring that non-credit-risk components of spreads remain fixed for three years. Let's find out how transparency will benefit borrowers.

Currently, it is difficul...