The Reserve Bank of India (RBI) today deferred the introduction of base rate system, which will be the new benchmark prime lending rate (PLR) for banks, by three months to July 1.
Banks will now implement base rate system from July 1, 2010, RBI Deputy Governor Usha Thorat said here.
"Concerns on base rate have been sorted out," she said.
Earlier, banks were expected to implement the base rate system from April 1.
RBI has come out with a proposal on replacing the current PLR with base rate system, below which no banks would be allowed to give commercial loans.
According to the draft norms on the RBI's website, the actual lending rate charged to borrowers would be the base rate plus borrower-specific charges, including product-specific operating cost, credit-risk premium and tenure premium.
The current PLR has been much abused, since banks provide many loans to high rated corporates below this rate.
As such there is no transparency in the lending rates, prompting the RBI to ask banks to implement the new base rate system.
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