New base rate method from July 1
The RBI said in a notification that Banks are permitted to change the benchmark and methodology used in the computation of Base Rate for a further period of six months.Earlier, banks were given time till December 31 to adopt the new method for computing base rate.
Base rate is a new system of lending money which will replace the existing system of Benchmark Prime Lending Rate (BPLR). According to RBI, this change in system will bring more transparency in rates. The lenders are not allowed to extend loans below the base rate.
Earlier, banks were given time till December 31 on Thursday RBI gave banks another six months till June 30 to adopt the new method for computing base rate. Banks will adopt the new method and New base rate method will be effective from July 1.
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