RBI likely to replace BPLR
2010 February 12
The Reserve Bank on Wednesday proposed to replace the current system of benchmark prime lending rate (BPLR) from next fiscal with a base rate below which no banks can advance commercial loans. “The base rate system will replace the BPLR system with effect from April 1. Since the base rate will be the minimum rate for all commercial loans, banks are not permitted to resort to any lending below the base rate,” Reserve Bank of India said. Banks often lend to larger clients at rate below BPLR. This step will bring transparency in the system. Accordingly, the current requirement that BPLR will be the ceiling rate for loans up to Rs 2 lakh will stand withdrawn, the RBI said.
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