New Delhi, Aug. 27 -- In a move aimed at making loan pricing more transparent and interest rates easier to compare, the Reserve Bank of India (RBI) has proposed a common framework for how banks and non-banking financial companies (NBFCs) determine and revise the spread charged over benchmark rates on retail, personal and business loans.

Currently, banks largely decide spreads over benchmark rates through their internal policies, while NBFCs can also choose their own benchmarks. This has resulted in different pricing methods across lenders, making it difficult for borrowers to compare loans.

For floating-rate retail loans-typically home loans-and MSME loans, banks are required to use an external benchmark such as the repo rate, Governmen...