Difference b/w PLR & Base Rate?

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Jyoti (Querist)

12 February 2011 Dear Experts,

What is the difference b/w base rate and benchmark prime lending rate?

Is it correct that base rate is a rate set by RBI for all banks at which they lend to their customers.It is uniform for all banks.

On ther otherhand benchmark prime lending rate is the rate based on bank individual choice for lending.

Please guide me.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)

12 February 2011 BANK RATE---
bank rate is rate which is used for lending or borrowing in call money market (One bank lends to or borrows from other banks for intra day)

PLR--
Rate is benchmark rate for banks.

Jyoti

Jyoti (Querist)

12 February 2011 Sorry sir but i want to know about base rate not bank rate. Are they same?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)

12 February 2011 Base Rate System is for the banks to set a level of minimum interest rates charged while giving out the loans. This Base Rate System has many advantages over the older method of Prime Lending Rate (PLR). One advantage is, in the Prime Lending Rate (PLR), one could sanction the loan for lower price for the preferred customer or the corporate bodies and retail customers may have to pay more for the same type of loans. In the base rate system, there will not be much variance on the loans.

for more info:
https://www.thinkplaninvest.com/2010/07/what-is-base-rate-system-for-banks/

Jyoti

Jyoti (Querist)

12 February 2011 Thanks for guiding me sir.

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