What is Base Rate | know about the base rate Calculate

Know About Base Rate. How to calculate base rates in India. Difference between Base Rates and Bank Prime Lending Rates. BPLR differ from BR. Latest base Rates of Banks in India April 2019.

New base rates: SBI – 8.65%, ICICI Bank – 8.85%, Axis Bank – 8.95%, Kotak Bank – 9.10%, PNB – 9.15%, Union Bank – 8.95%, OBC – 9.45%, IDBI Bank – 9.50%, Yes Bank – 10.25%. Bank of India’s new base rate is 9.45% and revised base rate of Andhra Bank is 9.55%

What is the base rate (BR)?
It is the minimum rate of interest that a bank is allowed to charge from its customers. Unless mandated by the government, RBI rule stipulates that no bank can offer loans at a rate lower than BR to any of its customers.

How is the base rate calculated?

A host of factors, like the cost of deposits, administrative costs, a bank’s profitability in the previous financial year and a few other parameters, with stipulated weights, are considered while calculating a lender’s BR. The cost of deposits has the highest weight in calculating the new benchmark. Banks, however, have the leeway to take into account the cost of deposits of any tenure while calculating their BR. For example, SBI took costs of its 6-month deposits into account while calculating its BR, which it has fixed at 9.3%.

When will the base rate come into force?

It is effective from Thursday, Sep 30. However, all existing loans, including home loans and car loan, will continue to be at the current rate. Only the new loans taken on or after July 1 and old loans being renewed after this date will be linked to BR.

Current Latest Base Rates of All Major Banks of India 2019

Banks Name Current Base Rates 2019 Latest Update on Base Rates of Bank
Allahabad Bank 9.70% 5-Oct-15
Andhra Bank 9.55% 01-Oct-17
Axis Bank 8.95% 2-Jan-17
Bank of Baroda 9.15% 01 Oct 2017
Bank of India 9.45% 30-Oct-17
Bank of Maharashtra 9.60% 07-Oct-17
BNP 8.90% 9-Sep-15
Canara Bank 09.40% N.A
Central Bank of India 09.60% 20-Nov-17
Citibank 08.45% 7-Feb-18
Corporation Bank 9.65% 8-Oct-15
Dena Bank 9.60% 01-Oct-17
Dhan Laxmi Bank 11.25% 3-Feb-18
DHFL PLR 18.50% 15-Apr-15
Federal Bank 8.63% 1-Dec-15
HDFC Bank 8.85% 30-Nov-17
HSBC Bank 8.90% 01-June-17
ICICI Bank 8.85% 13-Nov-17
IDBI Bank 9.50% 1-Jan-17
Indian Bank 9.45% 7-May-17
Indian Overseas Bank 9.45% N.A
IndusInd Bank 10.55% 17-Jan-17
Karnataka Bank 10.25% N.A
Karur Vysya Bank 10.10% 07-June-17
Kotak Bank 9.10% 16-Oct-17
OBC 9.45% 30-Oct-17
PNB 9.15% 1-Sep-17
PNB Housing Finance 10.25% 17-Nov-16
Punjab and Sind Bank 9.70% 15-Jan-18
Ratnakar Bank 10.10% 26-Dec-17
SBI 8.65% 29-Sep-15
Standard Chartered Bank 8.35% 30-12-2017
Syndicate Bank 9.50% 10-Dec-17
UCO Bank 9.60% 10-Nov-17
Union Bank of India 8.95% 30-Sep-17
United Bank of India 9.65% 12-Oct-15
Vijaya Bank 09.65% N.A
Yes Bank 10.25% 5-Oct-15

How is it different from bank prime lending rate?
BR is a more objective reference number than the bank prime lending rate (BPLR) — the current benchmark. BPLR is the rate at which a bank is willing to lend to its most trustworthy, low-risk customer. However, often banks lend at rates below BPLR. For example, most home loan rates are at sub-BPLR levels. Some large corporates also get loans at rates substantially lower than BPLR. For all banks, BR will be much lower than their BPLR.

How often can a bank change its BR?
A bank can change its BR every quarter, and also during the quarter.

What does it mean for corporate borrowers?
Under the BPLR system, large corporates who enjoyed rates as low as 4-6% will be hit since from July 1 no bank can lend at rates below BR. However, there is a chance that some corporates, with low-risk profile, would get a lower rate under the new system as under the BR regime banks are expected to take into consideration the risk levels of the borrower.

What does it mean for retail customers?
The impact could be an increase or decrease of 25 basis points (100 basis points = 1%) compared to the current rate of interest they are enjoying. However, existing customers will not be impacted by this change.

What does it mean for the banks?
Banks’ net interest margin will be unaffected. The impact on banks’ profitability because of moving to the BR regime is yet not clear.

Can a customer move from the BPLR to BR regime before the expiry of the current BPLR-linked loan tenure?
It depends upon individual banks. Some banks, like the Central Bank of India, are offering such an option to existing customers. For customers, a shift before the expiry of the tenure of the existing loan will make sense only if the BR-linked interest rate is lower than the BPLR-linked rate.