A bank follows the External Benchmark-based Lending Rate (EBLR) system linked to the RBI Repo Rate (currently 6.50%). The bank's internal policy mandates a fixed Operating Cost Spread of 0.50% for all retail loans. Based on a client's credit profile, the bank assigns a Credit Risk Premium of 1.80%. If the RBI increases the Repo Rate by 0.25% exactly three months after the loan is sanctioned, which option correctly identifies the initial Effective Lending Rate, the minimum reset frequency mandated by the RBI, and the final Effective Lending Rate after the reset?

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General Studies · Monetary Policy & Lending Rates

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Initial Rate: 8.80%; Frequency: At least once in three months; Final Rate: 9.05%

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Answer 1

Initial Rate: 8.80%; Frequency: At least once in three months; Final Rate: 9.05%

Answer 2

Initial Rate: 8.80%; Frequency: At least once in three months; Final Rate: 8.55%

Answer 3

Initial Rate: 8.30%; Frequency: At least once in six months; Final Rate: 8.55%

Answer 4

Initial Rate: 8.80%; Frequency: At least once in three months; Final Rate: 9.25%

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