RBI's Base Lending Rate for Banks in Effect From July 1

Submitted by Varun Jain on Mon, 03/08/2010 - 22:23

RBI's Base Lending Rate for Banks in Effect From July 1The Reserve Bank of India (RBI) on Friday announced that the new base lending rate for banks, aimed to introduce more transparency to loan pricing, will be implemented from July 1.

The central bank also exempted three categories of loans from the new system. In mid-February, the RBI had reported that it would employ the base rate from April.

The base rate is revealed to be the new reference rate for determining lending rates for banks, and will be implemented three months later than earlier planned.

As per the draft guidelines on the Reserve Bank of India's website, the actual lending rate imposed on borrowers would be the base rate added to borrower-specific charges including product-specific operating cost, credit-risk premium and tenure premium.

The base rates of most banks are expected to lie in the bracket 8.5-9.5%.

Large Indian companies possessing good credit are able to lend at interest rates below 10 per cent, below average benchmark prime lending rates for banks of around 11-12 per cent.


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Reliance Industries Purchase an Additional 0.68% Interest in EIH Ltd.

Reliance Industries Purchase an Additional 0.68% Interest in EIH Ltd.

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