| RBI proposes Base Rate as replacement for Prime Lending Rate |
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| Written by Site Administrator |
| Wednesday, 21 October 2009 10:00 |
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To increase the transparency of interest rates for consumers, RBI has proposed the introduction of base rate for calculation of interest rates. Base rate would include all possible costs that are easily identified. The banks can charge interest rates above this base rate for loans that consumers take. This new mechanism if agreed upon will replace the existing Benchmark Prime Lending Rate (BPLR). All banks will have to declare their base rates to RBI. This base rate will also serve as basis for all floating loan products available with banks. Banks can lend at rates below the base rate if the loan tenure is less than one year and the borrower credit profile has been good. Currently, many banks lend at rates below the BPLR which RBI feels does not make and business sense. Comments (0) |