Banking: Why the option of external benchmark deposit rate (

Banking: Why the option of external benchmark deposit rate (EBDR) needs to evolve in India

Based on the outstanding deposits of the previous financial year, an incremental sum, perhaps 5%, can be designated as market-based deposits. Subsequently, banks can align the use of these funds to lend to borrowers matching the specified profile. For instance, if the deposit is linked to a 10-year G-Sec bond or a one-year treasury bill, a similar benchmarking should be allowed within the extended EBLR system, enabling banks to maintain the spread.

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