Nbfc interest rate

Shobhit Jain (Querist) 09 April 2020 This query is : Resolved
Is there any limit on minimum rate at which NBFC can lend money to its borrowers?

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Non-Banking Financial Companies (NBFCs) do not have a fixed minimum lending rate; this is generally negotiable between the parties. However, the Reserve Bank of India (RBI) does announce an average base rate for NBFCs, which acts as a benchmark. For NBFC-Micro Finance Institutions (NBFC-MFIs), there's a maximum differential of 4% between the minimum and maximum interest rates on individual loans, and they must clearly display their lending rates.

Raj Kumar Makkad (Expert) 09 April 2020
Though under revised RBI guidelines the exposure money of the bank to NBFC has been revised from 15% to 20% but there is no minimum rate of interest for lending the money by Non Banking Finance Companies which means the same is negotiable between both the contracting parties.

KISHAN DUTT KALASKAR (Expert) 10 April 2020
Dear Sir
NBFC interest rate policy
Co-origination of loans by Banks and NBFCs for lending to priority sector
Example 1
Blended interest rate calculations Bank NBFC
Benchmark Interest Rate 8% 9%
Spread 2% 3%
Interest rate to consumer 10% (A) 12% (B)
2 more rows•Sep 21, 2018

SHIRISH PAWAR, 7738990900 (Expert) 10 April 2020
Dear querist,

RBI announce the rate below which banks and NBFC cannot lend. The rate declared by RBI is binding to all NBFC and banks.

Regards,

Shobhit Jain (Querist) 10 April 2020
Minimum rate of interest announced by RBI is known as?

Rajendra K Goyal (Expert) 10 April 2020
RBI announces average base rate for NBFCs.

The Reserve Bank of India announced the applicable average base rate to be charged by Non-Banking Financial Company – Micro Finance Institutions (NBFC-MFIs) to their borrowers for the quarter beginning April 1, 2020 at 8.76 per cent.

Rajendra K Goyal (Expert) 11 April 2020
This is an academic query.
Author has not mentioned how he is concerned or what are the the facts of the problem?.
No Minimum rate of interest to be charged by NBFC is fixed.
RBI announces average base rate for NBFCs.

T. Kalaiselvan, Advocate (Expert) 12 April 2020
an NBFC-MFI can charge a differential rate of interest to its customers but the variance for individual loans between the minimum and maximum interest rate cannot exceed 4 per cent.

T. Kalaiselvan, Advocate (Expert) 12 April 2020
What are the charges that a customer is supposed to pay for the loan that he takes from an NBFC-MFI?

A customer needs to know that there are only three components in the pricing of a loan viz. the interest charge, the processing charge and the insurance premium (which includes the administrative charges in respect thereof). An NBFC-MFI cannot levy any charges apart from the three mentioned above.

T. Kalaiselvan, Advocate (Expert) 12 April 2020
How can a borrower find about the current interest rate being charged by the NBFC-MFI?

RBI has made it mandatory for the NBFC-MFI to prominently display in all its offices and in the literature issued by it and on its website, the effective rate of interest being charged by it.

Dr J C Vashista (Expert) 13 April 2020
The NBFC has to display prominently the borrowing and lending rate(s) of interest in terms of guidelines issued by Reserve Bank of India, if you are interested in borrowing.
Prima facie it is an academic topic for time pass debate, where no dispute is involved for consideration and obligation of experts.

Rajendra K Goyal (Expert) 13 April 2020
Agree with the expert Dr. J.C. Vashishta ji. It is academic query, also it appears that the query has been posted to test the knowledge of the experts.

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