Bankers hail RBI's base rate proposal

“This would help for more scientific bargaining rather than bargaining without any base. This will also ensure that banks can charge their customers according to their risk appetite,” Punjab National Bank Chairman and Managing Director, K R Kamath said.

To make bank lending more transparent, RBI on Wednesday proposed the new base rate model instead of the present BPLR system, from next fiscal. The new system prevents banks to lend below their base rate even for top-rated clients.

Presently, banks offer loans to corporate clients much below their Benchmark Prime Lending Rate (BPLR), inviting the apex bank’s attention to the matter.

Further, Kamath ruled out any impact on banks’ credit growth or net interest margins because of the proposed model, saying that the new system would offer a level-playing field to everyone and corporates can still bargain for better pricing from banks.