As a new year gift to its customers, India’s largest public sector Bank SBI cuts base rate by 30 bps on Monday. The bank also reduced its benchmark prime lending rate (BPLR) by 30 basis points. With this new year reduction the base rates of SBI are now the lowest among other lending banks.
The SBI new base rates will be in effect form January 1, 2018. As per the changes, base rates is now 8.65% from earlier 8.95% and benchmark prime lending rate (BPLR) has been reduced from 13.70 per cent to new 13.40%. As per the concerned officers the new reduced rates will benefit existing 80 Lakh SBI customers.
Apart from reduction in base rate and BPLR, bank has also extended its period for waiving home loan processing fee to March 31, 2018 to current customers. As per the bank, home loan processing fee waiver scheme can also be availed by those who are looking to switch their current loans from other banks to SBI.
What is base Rate?
Base rate is defined as the minimum rate below which banks cannot give loan to its customers. The minimum base rate is set by Reserve Bank of India. It is decided to improve credit market transparency and to make it sure that banks pass on the lower cost of fund to their customers.
Benchmark Prime Lending Rate (BPLR)
Benchmark Prime Lending Rate (BPLR) is the rate at which commercial banks charge their customers who are most credit worthy. As per the central bank or Reserve Bank of India (RBI), banks have authority to fix the BPLR with the approval of their Boards. However, the RBI stipulates the interest rates as BPLR is influenced by the Repo rate and Cash Reserve Ratio (CRR) apart from individual bank’s policy.