<h1>Monetary transmission in India: move loan pricing to external benchmarks and fix spreads to improve pass-through.</h1> Pass-through from the policy repo rate to bank lending rates in India has been slow and uneven due to a bank-dominated financial system, widespread use of internal loan-pricing benchmarks (PLR/BPLR/base rate/MCLR), liability-side rigidity from fixed-rate and long-maturity deposits, discretionary spread adjustments by banks, and weak bank balance sheets. A Study Group recommends shifting new floating-rate loans to selected external benchmarks, fixing spreads except on predefined credit events, shortening reset periodicity to quarterly, and encouraging floating-rate deposits, supported by NPA resolution and bank recapitalisation to restore transmission.