New Base Rate System

Press Information Bureau

Government of India

Ministry of Finance

27-March-2012 18:29 IST

The Reserve Bank of India (RBI) has issued guidelines on Base Rate system replacing the Bench Prime Lending Rate system (BPLR) with effect from July 1, 2010. In terms of these guidelines, banks determine their actual lending rate on loans and advances with reference to the Base Rate. All categories of loans are priced only with reference to the Base Rate, which are announced by banks after seeking approval from their respective Boards. Since the Base Rate will be the minimum rate for all loans, banks are not permitted to resort to any lending below the Base Rate.

The Base Rate is aimed at enhancing transparency in lending rates of banks and enabling better assessment of transmission of monetary policy.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Rajya Sabha today.

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