The minimum interest rate of bank below which it is not viable to lend is known as
Answers
This type of interest rate is referred to as Prime Lending Rate, below the BPLR or Benchmark Prime Lending Rate, as per its introduction in 2003.
This prime lending rate is offered to those credit worthy clients, whose investments deem promising to the banks.
The main objective of the base lending rates was to maintain its was to bring transparency to lending rates. However, with the introduction of Base Rate, BPLR has now lost its significance and is made applicable normally only on the loans which have been sanctioned before the introduction of Base Rate in July 2010.
RBI doesnt fix the base rate in banks;rather RBI has issued broad guidelines to bank as to how they should arrive at the base rate.
And thus, its up to the banks as to whom they want to offer the rates.
The minimum interest rate of a bank below which is not viable to lend by the bank is known as the base rate.
Explanation:
- The 'base rate' is the rate below which the bank will not make any lending as 'it is not viable' to carry out business.
- The base rate is declared by the 'reserve bank of India'.
- This rate is usually as high as 9 or 10 percent above which banks provide loans for various means.
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