NEWS & ADVICE : HOME LOANS
Banks should get out of ‘conservative banking’ mindset: Subbarao
By Joseph Samson
Nov 30, 2009
Print    Email    RSS   

The RBI governor, D Subbarao said that the bankers' conservative mindset has led to non-transparency in lending rates.

The problem is the wide difference between the central bank's policy rates and the actual rates at which banks lend.

The benchmark prime lending rate (BPLR) is the rate at which banks lend and this rate is much higher than RBI's repo rate, the rate at which RBI lends to bank.

Banks lend a lot of capital to big businesses at a rate much lower than twice the benchmark prime lending rate. However, the lending rate in case of small businesses is much higher than the BPLR. Thus there is no transparency in the lending system and the BPLR is rendered meaningless.

An RBI committee has already proposed the replacement of the BPLR with something called the base rate.

The base rate would be directly linked to deposit rates offered by each bank and hence restrict banks from charging interest rates as per their discretion.

 


(Comments Posted : 0) Post Your Comments
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Manage your loans, avoid recovery agents
Prepayment on loans: 'To do or not to do'
Carnival of Indian Personal Finance Blogs #1
Banking Ombudsman: to the aid of the customer
Should interest rate only be considered in...


PINJORE: CaℒL Giℛℒs In PiNjOrE 09915787550...
PINJORE: CaℒL Giℛℒ In PiNjOrE 09915787550...
how to gate my home loan certificate

NEWS THIS WEEK
Canara Bank earned a profit of 60%. Feb 6, 2015
New Branch of Laxmi Vilas bank at Vijayawada Jan 30, 2015
Home loan EMIs expected to drop down Jan 21, 2015
Corporation Bank received MSME banking excellence award 2014 Jan 19, 2015
Home loan rates set to fall, after reduction in repo rate Jan 16, 2015
News Archive