The Reserve Bank of India (RBI), on November 28, 2025, issued the Reserve Bank of India (Commercial Banks – Interest Rates on Advances) Directions, 2025, establishing a unified regulatory framework for pricing of loans and advances by commercial banks. These Directions apply to all commercial banks except SFBs, PBs and LABs, and require each bank to adopt a Board-approved interest-rate policy governing fixed and floating rates, benchmark selection, spreads, and periodicity of interest application.
The framework mandates that all floating-rate loans (except specified exemptions) be linked to an approved internal or external benchmark such as the RBI policy repo rate or FBIL-published Treasury Bill yields. Banks may offer fixed or floating rates, but fixed-rate loans below a three-year tenor must not be priced below the benchmark for similar maturities. The Directions also standardize monthly rests for interest charging, provide special norms for agricultural lending (including caps for small/marginal farmers), stipulate fair pricing for small-value personal loans, and prohibit lending below the benchmark rate.
Further, the Directions define eligible benchmarks, specify rules for determination of spreads, govern foreign-currency advances, and reiterate that borrowers must not be disadvantaged during branch takeovers. The Directions supersede earlier instructions to the extent of inconsistency.
[Notification No. RBI/DOR/2025-26/161]
