PBOC unveils new rules for how banks determine rates by linking them to redesigned national LPRs

Public sector banks Punjab National Bank (PNB) and Allahabad Bank on Tuesday launched retail loan products that are linked to the Reserve Bank of India’s (RBI) repo rate. Linking of loans with the repo rate will make them cheaper.

China’s central bank said the interest rate on new personal mortgage loans will be based on the latest monthly loan prime rate.

Investment benchmarks serve as meaningful reference points that help investors draw comparisons of their funds’ or stocks’ performance. Similarly, in lending, a benchmark rate serves as a transparent reference rate used by financial intermediaries such as banks to determine the price at which they offer loans to customers.

China’s biggest banks responded to government demands to help spur a slowing economy. The cost of their efforts has been disappointing profits and shrinking loan margins.

Indian home loans float only in one direction—up. Successive Reserve Bank of India (RBI) governors have tried to use a mix of benchmarks, moral-suation and nudges to get the banks to be fair to a set of borrowers who now account for a large part of the banks’ loan books,…