The Reserve Bank has directed banks to link all the new floating rate loan to medium enterprises with external benchmark.In a circular, RBI said that the direction will be effective from 1st April 2020. With respect to micro and small enterprises, floating rate loans are already linked with external benchmarks.

The move is aimed at further strengthening monetary policy transmission so that benefits of reduction in key lending rate can be passed on to medium enterprises.According to RBI, the monetary policy transmission has improved in respect of the sectors where new floating rate loans have been linked to external benchmarks.#casansaar (Source-Newsonair)