Banks have been given an extension til June 30, 2011 to implement the new method of base rate into their lending processes by Reserve Bank of India. Base rate is the prime lending rate below which banks cannot lend to customers.

"Banks are permitted to change the benchmark and methodology used in the computation of Base Rate for a further period of six months, ie upto June 30, 2011," the RBI said in a notification.

The deadline for the same was previously set for December 31, 2010 which finally has received an extension. It was from July 1, 2010 that banks were asked to finally do away with the benchmark prime lending rate (BPLR) system of lending.

Under the BPLR system, banks used to lend to prime customers at rates below the prime lending rate which had started causing dissentment amongst the retail borrowers.