New Delhi: Different Prime Lending Rates (PLRs) for different types of loans has become a cause of concern for RBI and it has asked banks to furnish details about the PLRs. This is one more step by RBI in ensuring transparency in loan pricing mechanism.

Banks have been following different benchmark rates for home loans, auto loans and other retail loans, while the apex regulating body RBI wanted them to have a single Benchmark PLR (BPLR) and charge an amount over this BPLR depending on the banks cost of funds and expected margins.

RBI is now pressing the banks to follow this rule and also disclose the details of the cost of funds to the customer while charging an interest rate, particularly the floating interest rate.

Though the cost of funds does not change for different kinds of loans, there is no need for different PLR's and there is an urgent need for bringing transparency in the system. Some banks have different benchmark floating rates even for the same kind of loan. That is, one for old customers and one for the new ones. Recent hike in loan interest rates has led to a high rate of defaults, which is threatening to cripple the banking system and increase their non performing assets.