If you compare the interest costs of your friends and relatives on bank loans -- housing, auto, personal loan, etc.-- you will realise that they vary drastically. And these costs not only vary across banks, but across customers of the same bank--and not because of varying customer credit scores. Some banks have been offering loans at cheaper rates to new customers, while charging old customers a higher rate. Banks continue to follow the discriminatory practice of offering differential rates for existing and new customers and this should stop.

As the banking regulator, the Reserve Bank of India (RBI) should stop this discriminatory practice, which it is partly responsible for creating. The RBI introduced the MCLR (marginal cost based lending rate) method, effective April 2016, to enable a faster transmission of rate cuts to bank customers, replacing the base rate method that was being used by banks to set their lending rates--earlier the base rate had replaced the less transparent prime lending rate (PLR).

Now, borrowers who took loans 4-5 years back, and did not ask their bank to switch to the newer regime, are still linked to the PLR. Those who borrowed when the base rate became the benchmark are stuck with the base rate. Now, while banks are giving new loans at cheaper rates, based on MCLR, old customers are still paying higher rates.