Loan seekers from non-banking financial companies (NBFCs) and microfinance institutions will have to pay at least 9.18% interest. The Reserve Bank of India (RBI) has asked these lenders to set an average base rate of 9.18 per cent. The NBFCs and MFIs will have to charge this rate from their customers for the quarter beginning July 1. RBI said on Friday, "The applicable average base rate to be charged by non-banking financial companies and microfinance institutions (NBFC-MFIs) to their borrowers for the quarter beginning July 1, 2019, will be 9.18 per cent." 

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A 2014 circular of the RBI had communicated to NBFCs and MFIs regarding the pricing of credit on the last working day of every quarter. The central bank sets the average base rate for NBFC-MFIs on the basis of the average of base rate of the five largest commercial banks.

Governor cautions against data cherry picking

Reserve Bank Governor Shaktikanta Das on Friday cautioned against cherry-picking of data by experts. The governor's remarks came in the wake of recent controversies over GDP data after former Chief Economic Adviser Arvind Subramanian in a research paper claimed that India has over-estimated its economic growth.

"In recent times, there have been animated discussions on the precision of statistical methods. The doctrine – even tradition - of statistical significance in scientific research has come under some cloud for its veracity and the journal American Statistician published a special edition on this issue earlier this year. Critics allege that these tests are susceptible to manipulation in order to make desired results significant, and undesired results non-significant. Further, some important results may be discarded at the conception level itself just because they are highly unlikely," said Das.

"Similarly, an opportunity to cherry-pick variables is available. In other words, correlations can conveniently be extended to establish spurious causality. In this context, do’s and don’t’s have been cited: ‘don’t say statistically significant’ is one of them. Yet, as the global financial crisis demonstrated, tail risks materialised and the world was not the same again. These lessons inform our modelling of corporate financial risks on an ongoing basis. As the American Statistician recommends, “Accept uncertainty. Be Thoughtful, Open, and Modest”; in short, “ATOM.”, he added.