Ujjivan Financial Services Limited the micro finance lender announced interest cut Thursday to the tune of 75 basis points with effect for October 1, 2016.
The new rules would thus force lenders to adjust their lending rates based on market rates, removing some of the sector's discretion in deciding how much to charge for loans.
Vaibhav Agrawal, banking analyst, Angel Broking, gives his views on the impact of moving towards marginal cost of funding.
Due to this transition towards marginal cost of funding, Romesh Sobti, MD and CEO, IndusInd Bank says there will be a transitory compression of margins, but not a permanent one.