Module: | KYC, NPAs, Advances & Investment Valuations
Q228: Which of the following statements regarding the operational framework of the "External Benchmark" system are correct?
1. Floating rate loans to Micro and Small Enterprises (MSEs), were required to be benchmarked to an external rate, effective from October 01, 2019.
2. Floating rate loans to Medium Enterprises, were required to be benchmarked to an external rate, effective from April 01, 2020.
3. Banks are permitted to adopt multiple different external benchmarks within the same loan category (e.g., distinct benchmarks for different housing loan products).
4. The interest rate under the external benchmark system, must be reset at least once in three months.
2. Floating rate loans to Medium Enterprises, were required to be benchmarked to an external rate, effective from April 01, 2020.
3. Banks are permitted to adopt multiple different external benchmarks within the same loan category (e.g., distinct benchmarks for different housing loan products).
4. The interest rate under the external benchmark system, must be reset at least once in three months.
✅ Correct Answer: B
Statements 1, 2, and 4 are correct.
Statement 3 is incorrect because the Directions explicitly mandate that a bank must adopt a uniform external benchmark within a loan category to ensure standardization and transparency; mixing benchmarks within a category is not permitted.
Statement 3 is incorrect because the Directions explicitly mandate that a bank must adopt a uniform external benchmark within a loan category to ensure standardization and transparency; mixing benchmarks within a category is not permitted.