A Reserve Bank of India (RBI) working group is likely to recommend two types of benchmark prime lending rates — one for retail loans and another for wholesale borrowers — to bring in more tranceparency and may put a ceiling on advances given below these rates.
The working group, constituted to review BPLR (rates that commercial banks charge their most credit worthy customers) had received suggestions from IBA and other industry experts to rework the existing BPLR system and had formed a draft report. The panel met today to discuss the report.
The group, headed by RBI Executive Director Deepak Mohanty, is likely to submit the final report to RBI Governor D Subbarao by the end of this month, a banking industry source told PTI.
"The panel has accepted two PLRs — one for retail and one for wholesale borrowers. This is most likely to be inducted in the final report. Also, the committee has plans to put a ceiling on banks' sub-PLR lending to enhance transparency in lending," the source said.
Though exclusion of home loans from the BPLR's fold was under consideration, the working group is unlikely to accept this suggestion as it feels that double BPLR system will alone help to bring transparency in banks' lending.
"They may not accept it (exclusion of home loans from BPLR). They feel that splitting prime lending rate to two types will be enough to safeguard the interests of customers," the source said.
