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| The single benchmark PLR was proposed by the IBA along the lines of the statement made in the monetary and credit policy review by the Reserve Bank of India. |
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| Sources added that the IBA committee will further re-examine the issue of formulation of PLR and take a closer look at the implications it will have on the existing lending procedures, most of which are not linked to the PLR. |
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| IBA had proposed a cost-based single benchmark PLR whereby each bank will publish a single PLR which will take into account various cost components like operating costs, asset and liability costs, term premiums, interest rate risk, profit margin, capital charges etc. |
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| It was proposed that loans outside the purview of PLR will be kept separate but instead of having multiple PLRs, there will be only one PLR. |
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| However, under this norm, each bank will be free to decide on the spread above the PLR. |
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| This was expected to reduce the anomaly in the loan market as once a PLR for a bank is defined, it cannot violently swerve when deciding on the rates to offer for loans. |
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| Bankers are of the view that the issue should be once again re-examined as various loans such as those for home and retail are out of the PLR ambit and it is only the cut-throat competition in the home loans segment that have spurred calls for a single PLR. |
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| Moreover, there are some clients who take sub-PLR rates. Therefore, a need was felt to look into the matter from a more practical perspective, it was felt. |
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