Public sector lender, Bank of India has raised its lending rates. Both base rate as well as benchmark prime lending rate (BPLR) have seen a rise.

The bank has raised base rate to 9% from 8.5% earlier and BPLR to 13.25% from 12.50% earlier. With introduction of base rate as the benchmark for lending, sub PLR lending has come to an end in the Indian banking industry. Earlier, before July 1, 2010, when BPLR was the benchmark rate for banks, they used to indulge into lending below it to the prime customers mainly corporates.

This distinction made by banks between retail and corporate clients led to many disputes arising from part of the customer which finally led to Reserve Bank of India coming up with base rate as the better system of lending.

All new loans sanctioned after July 1 are under base rate while existing borrowers have been given the option to choose from continuing with BPLR or switch to base rate.

With the mid quarter monetary policy review coming tomorrow, the step seemed inevitable.