Most of the public-sector banks are unwilling to lower the band over their prime lending rates (PLRs) from the current level of 4 per cent. The band over the PLR indicates the maximum rate at which a bank offers its loan products, with the PLR as the base rate.
In its April credit policy, the Reserve Bank of India (RBI) directed all public-sector banks to make public the band over the PLR.
Although the RBI did not explicitly state that banks should bring down the band, governor Bimal Jalan pointed out that the existing level was high. Only the State Bank of India (SBI) has pegged its band over the PLR at 3 per cent.
According to sources in the banking industry, most banks have written to the RBI indicating a 4 per cent band after they finalised their balance sheets.
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