- TREASURY BILL BENCHMARK LINKED LENDING RATE
Citi India introduces mortgage loans linked to the 3 month Government of India Treasury Bill Benchmark Rate. Choose our Treasury Bill linked mortgage loan option to avail a reference rate for your loan which is simple to understand and can also be conveniently and independently tracked for the movement in your interest rates.
More About Treasury Bill linked Mortgage Loans
- What is a Treasury Bill Benchmark linked Lending Rate (TBLR)?
Treasury Bill Benchmark linked Lending Rate (TBLR) is an external benchmark linked lending rate introduced by Citibank, N.A. with effect from 24th January 2018 for its mortgage loans. Should you avail this option, the interest rate on your mortgage loan will be linked to TBLR in place of the MCLR
- What is a Treasury bill benchmark rate?
Treasury Bill is a short term (up to 1 year) debt issuance from the Government of India. These instruments are issued at a discount and redeemed at the face value on maturity, which provides the interest rate return on the security. Financial Benchmarks India Pvt. Limited (FBIL) is an independent benchmark administrator and provides daily T Bill rate Benchmarks which are available at http://www.fbil.org.in/.
- What is Financial Benchmarks India Pvt. Ltd (FBIL)?
Basis Reserve Bank of India recommendation, Financial Benchmarks India Pvt. Limited (FBIL) was jointly promoted by Fixed Income Money Market & Derivative Association of India (FIMMDA), Foreign Exchange Dealers’ Association of India (FEDAI) and Indian Banks’ Association (IBA). It was incorporated on 9th December, 2014 under the Companies Act 2013. It was recognized by Reserve bank of India as an independent Benchmark administrator on 2nd July, 2015.
The main object of the company is to act as an administrator of the Indian interest rate and foreign exchange benchmarks and to introduce and implement policies and procedures to handle the benchmarks. FBIL reviews each benchmark to ensure that the benchmarks accurately represent the economic realities of the interest that it intends to measure.
- How is the TBLR calculated?
The TBLR which will serve as the reference rate will be determined by the using the 3 month Treasury bill reference rate published By Financial Benchmarks India Pvt. Limited (FBIL). The FBIL published rate, will be rounded off to the nearest 5 basis points (0.05%) to arrive at the applicable TBLR.
The T Bill rates are determined and published on a daily basis by FBIL. The bank will use the 3 month T Bill benchmark as of a specific date of a month to determine TBLR. The details with respect to the same are provided in the loan agreement.
- How is it more transparent than MCLR?
The TBLR is published by an external benchmark administrator which was set up under recommendation from the RBI. It is a completely independent entity and is not owned by any one bank. The reference rate is published by FBIL and is publically available at www.fbil.org.
- Why should I opt for TBLR? How will it benefit me?
TBLR is based on a publically available rate which is published by an independent benchmark administrator recognized by RBI. The Monetary policy and key rate changes by RBI also influence movement in Treasury bill rates and consequently the T Bill benchmark rates published by FBIL.
Having a loan linked to a FBIL T Bill Rate would provide a customer a reference rate which is simple to calculate and also enable them to conveniently and independently track the movement in their interest rates. The FBIL T Bill benchmark data is published by FBIL on a daily basis and is available on their website www.fbil.org.in
- How is the rate of interest on a loan determined under TBLR?
For new mortgage loans booked from January 24, 2018, the interest rate on the loan may be benchmarked to the TBLR. The customer interest rate = TBLR as applicable during that month + Spread.
The spread is determined by various factors which comprise of internal Citi loan assessment parameters which, amongst other factors, include loan amount and facility type.
The customer also has an option to link the interest rate on the loan availed to Marginal Cost of funds based Lending Rate (MCLR) offered by the bank.
- Would TBLR get reviewed? If yes, when?
Yes, the bank shall review and publish the TBLR every month. The change to the TBLR shall be duly communicated to customers with TBLR linked loans. The T Bill reference rate published by FBIL on a predetermined date will be used as the basis for TBLR. In the event of that particular date being a holiday, the next working day's rate will be used.
- How often will my rate be reset? What are the interest rate reset dates for a TBLR linked home loan?
The interest rate on the linked loan will be reset on a quarterly basis. The TBLR rate published by Citi is available at the Citi website at www.citibank.com/india
The TBLR interest rate reset dates in the quarterly reset are 1st March, 1st June, 1st September and 1st December. To clarify, in the event of increase/decrease in TBLR in October 2018 (e.g.0.10%) and then again increase/decrease in November 2018 (e.g. 0.10%), the interest rate reset date for both changes will be 1st December 2018 and the rate will increase/decrease by 0.20%.
- What is the current TBLR?
To know the latest TBLR rate, click here
- I want to apply for a new loan with Citi - would I be eligible enrolment in this new scheme?
For all new mortgage loans booked from January 24, 2018, the interest rate on the loan may be benchmarked to the TBLR, i.e. Customer interest rate = TBLR as applicable during that month + Spread
- Is the new TBLR linked rate available to for NR customers too?
Yes, the same is available for NR customers as well.
- I have an existing loan booked under CMPR, Base rate or MCLR. Can I get it converted to a TBLR rate system?
That is possible. An existing customer has an option to link their loan to TBLR, instead of MCLR/Base Rate/CMPR. This would require a supplementary agreement to be executed with the Bank and does not involve any additional cost to the customer.
If the customer wishes to opt to link their existing loan to TBLR, the interest rate on the loan will remain the same and a change will be made to the spread on the loan. The interest rate on linkage to TBLR will change upwards or downwards as the case may be, in line with movement of the TBLR, if any, with a quarterly reset frequency in the subsequent quarter/s, after execution of the supplementary agreement.
- Would there be any changes in the rate of Interest on the existing loan account (under CMPR/Base rate/MCLR) due to this scheme introduction?
If a customer wishes to opt to link their loan to TBLR, the interest rate on their loan will remain the same and a change will be made to the spread on the loan. The interest rate on linkage to TBLR will change upwards or downwards as the case may be, in line with movement of the TBLR, if any, with a quarterly reset frequency in the subsequent quarter/s, after execution of the supplementary agreement.
- Can I switch from TBLR to MCLR at a later date if I don't like the product / benchmark?
Yes. A customer who opts for TBLR linked Interest rate at the time of taking a new loan, can move from TBLR to MCLR at a later date. This would require a supplementary agreement to be executed with the Bank and does not involve any additional cost to the customer.
If the customer wishes to opt to link their existing loan to MCLR, the interest rate on the loan will remain the same and a change will be made to the spread on the loan. The interest rate on linkage to MCLR will change upwards or downwards as the case may be, in line with movement of the MCLR, if any, with a quarterly reset frequency in the subsequent quarter/s, after execution of the supplementary agreement.
- Why is only Citi following this, what about other banks?
Citibank has always endeavored to provide world class services and products to its clients.
In relatively more developed financial markets such as Singapore, UK, etc., there is a common concept of an External Benchmark /reference rate basis which all the variable rate products are linked to for interest rate movements. This ensures relatively higher transparency and even allows the borrowers to learn and track the movement of the benchmarks independently.
TBLR is our step in a similar direction to provide our customers with a simple to understand, convenient to track, and transparent reference rate for home loans.