Saturday, November 14, 2009

NEW NORMS FOR PRICING LOANS


  • Base Rate at 8.55 per cent taking 2008-09 data.
  • Sub-base rate lending not viable.
  • Norms to be applicable on loans with duration of one year and above, including working capital loans.
  • Lending below Base Rate not to exceed 15 per cent of total incremental lending for the financial year.
  • All new and existing loans that come up for renewal to come under the new rate.
  • All loan categories currently not linked to the Base Rate, except credit card receivables,  loans to banks’ own employees, etc.
  • Administered lending rate for small borrowers be deregulated.

According to the working group which reviewed the system of lending rates, the Base Rate could serve as the benchmark for floating rate loans. The committee wants banks to bring more transparency in pricing products and to reflect changes in policy rates. In addition, the committee
is contemplating abolition of sub-BPLR lending. Currently, more than 70 per cent loans are priced
below the BPLR.

0 comments:

Post a Comment