External benchmark-based lending rate (EBLR) is the reference rate used to determine interest rates for loans based on external benchmarks like RBI's repo rate, T-bill yields, etc. Before the introduction of EBLR, banks used to determine interest rates for their floating rate loans after considering internal factors like their cost of deposits, operating costs, cash reserve ratio, etc.
As per the RBI's guidelines, all retail and MSME loans offered by banks on floating rates has to be linked to EBLR. EBLR was introduced with the aim of quickening the transmission of policy or market interest rate changes to the borrowers.