A panel set up by the Reserve Bank of India (RBI) has recommended that banks' base lending rate should be based on the marginal cost of funds if their average deposit tenure is on the lower side.

The panel, which was headed by RBI Deputy Governor Anand Sinha, had been set up to bring in transparency in credit pricing framework among Indian banks.

The panel also said interest on floating rate loans should only be reset on specific dates irrespective of changes in the base rate.

The RBI has called for public comments on the recommendations by May 16. (Reuters)