Under the proposed rules, lenders would be required to have a board-approved methodology for determining the spread, with components including credit-risk premium, operating costs, tenor premium and business-strategy premium.

RBI’s proposed framework could limit larger NBFCs and HFCs from frequently changing spread components on floating-rate loans, potentially reducing pricing flexibility. Lenders would need a board-approved methodology for setting spreads, covering credit-risk premium, operating costs, tenor premium and business-strategy premium. Spread components other than credit-risk premium generally cannot be revised during the first three years, although Base Layer NBFCs are exempt from this restriction. The draft does not mandate external benchmark-linked lending for NBFCs and HFCs, but seeks greater transparency and discipline in benchmark and spread-setting practices.

The Reserve Bank of India ’s proposed overhaul of interest-rate rules could limit the ability of larger non-bank lenders to frequently alter loan pricing, potentially changing how NBFCs and housing finance companies manage spreads on floating-rate loans . The RBI’s draft Interest Rates on Loans and Advances Directions, 2026 seeks to bring greater consistency to how regulated entities determine and revise lending rates. The proposal is part of the central bank’s effort to harmonise interest-rate practices across banks and non-bank lenders and improve transparency for borrowers. A key provision is the proposed treatment of the spread charged over a benchmark. Lenders would be required to have a board-approved methodology for determining the spread, with components including credit-risk premium , operating costs, tenor premium and business-strategy premium. Advt

For floating-rate loans, the draft proposes that components of the spread other than the credit-risk premium generally cannot be changed during the first three years.

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