Who will benefit:The new rates should increase credit flow to small borrowers at lower rates than earlier, while it will increase the cost of funds to big corporates who use their bargaining power to negotiate at sharply below the BPLR
Under such cases, the Central bank has given freedom to banks for continuing the BPLR
system on which the loans were approved.
Though the Indian banking system is largely deregulated, banks were mandated to lend at rates lower than the BPLR
to farmers and exporters.
55 percent effective October 1, while maintaining its BPLR
unchanged at 13.
, which is the benchmark for all its old floating rate loans, has been increased from 13% to 13.
A committee has now been formed to review the BPLR
Global Banking News-June 9, 2015--Indian Bank reduces base rate, BPLR
by 30 basis points
is used for determining interest rates on loans and advances sanctioned up to June 30, 2010.
hike by SBI is likely to affect the equated monthly installments ( EMIs) of the existing home and auto loan borrowers by ` 16 per lakh for a 20- year loan.
This formula is more transparent than the BPLR
, which was not linked to any parameter in particular.
The reduction in both base rates and BPLR
are in response to the lowering of Cash Reserve Ratio by 25 basis points by Reserve Bank of India (RBI).
Those borrowers, who were on the BPLR
system, will see the burden rise by 25 basis points as the benchmark has been increased from 12.