Friday, June 12, 2009

RBI Board In The Direction Of Review BPLR Structures - June 12, 2009

On Thursday, the Reserve Bank of India (RBI) said that it had set up a working group on redrafting the benchmark prime lending rate (BPLR) method in order to make sure more transparent pricing of loans by banks. The group is headed by the RBI Executive Director Deepak Mohanty and would look at the best international practices and advise a suitable loan pricing system.

Additionally, it would also evaluate the administered lending rates for loans up to Rs 2 lakh given to exporters.

The committee would also imply apposite benchmark for floating rate loans in the retail segment, which are usually extended at a discount of 2.5-3 percentage points to the BPLR.

The RBI said in a public statement that the review was announced in the Annual Policy Statement in April this year.

The concept of BPLR was introduced in November 2003, to improve clearness in pricing of loans by commercial banks.

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