A top banker with a leading public sector bank said, the further hike in BPLR
, especially for auto loans, is being triggered by the increasing demand, which is robust where the waiting period for cars is on the rise.
SBI's move will affect the floating rate personal (including home and auto) loans and corporate loans that are pegged to the BPLR
Base rates are scheduled to replace the earlier mechanism, BPLR
, with effect from July 1, 2010, in line with the Reserve Bank of India's ( RBI) directive to the effect.
Accordingly, the current requirement of capping interest charged on loans of up to INR200,000 at the BPLR
has now been withdrawn, the central bank said.
It's common knowledge that the sub- BPLR
rates enjoyed by priority lending sectors was a move propelled, at least in part, by political will.
What's proposed: Base rate to replace BPLR
from April 1, 2010.
4,00,000 the rate of interest will not be more than 100 basis point over the BPLR
Both the public sector banks have decided to increase their BPLR
When) interest rates were indexed to the BPLR
, banks were reluctant to adjust their BPLRs
in response to the policy rate changes.
The benefit of reduction in BPLR
shall be applicable to all existing and new accounts linked with BPLR
, wherever interest rates are charged at BPLR
and above, it added.
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).
is the erstwhile benchmark rate for all loans and was replaced by a base rate in July 2010.