Economics · Economy

In a scenario where a commercial bank uses the External Benchmark Lending Rate (EBLR) for its retail and MSME loans, evaluate the following statements regarding the framework: Statement 1: The EBLR must be reset at least once every three months, meaning any change in the RBI Repo Rate will be reflected in the borrower's EMI or tenure within a maximum of 90 days. Statement 2: Banks are permitted to change the 'spread' over the external benchmark at their discretion every month to protect their Net Interest Margin (NIM) during volatile market conditions. Statement 3: For existing loans, the spread can only be changed if the credit assessment of the borrower undergoes a substantial change as per the bank's internal policy. Statement 4: The EBLR applies only to new loans sanctioned after October 2019, while all loans prior to that must remain on the Base Rate or MCLR regime without any option for the borrower to switch. Statement 5: The adoption of EBLR was aimed at improving the transmission of monetary policy, ensuring that the benefits of Repo Rate cuts are passed on to customers faster than the MCLR system. Statement 6: Under EBLR, the bank is prohibited from including its operating costs in the spread; instead, these must be covered by separate processing fees. Statement 7: If the Repo Rate increases by 25 basis points, the EBLR-linked loan rate must also increase by exactly 25 basis points if the Repo Rate is the chosen benchmark. Identify the correct set of statements.