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Reserve Bank ask banks to review base rate or minimum lending rate

Reserve Bank of India (RBI) has asked banks to review base rate or minimum lending rate every three months based on cost.

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Reserve Bank of India governor Raghuram Rajan
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Reserve Bank of India (RBI) has asked banks to review base rate or minimum lending rate every three months based on cost.

RBI said, "With a view to providing banks greater operational flexibility, it has been decided to allow banks to review the Base Rate methodology after three years from date of its finalization instead of the current periodicity of five years."

Accordingly, banks may change their Base Rate methodology after completion of prescribed period with the approval of their Board of Directors/ ALCO, however, banks will not be allowed to change their methodology during the review cycle, it said. 

 

 

 

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