Whenever we think about any type of loan like car loan or loan for personal requirements, the first thing is the interest rate that comes in mind. Then, we should be aware of the basic facts related to any type of home loan or personal loan. Here comes the concept of benchmark prime lending rate (BPLR), which is a standard rate of interest charged by the commercial banks and financial institutions on their loan products.
According to the standard guidelines of the central bank or reserve bank of India (RBI), every bank has given the right to fix BPLR according to their choices. Most of the banks provide loans and advances at a lower rate than the BPLR i.e. prime lending rate of the bank to the customers, who avail the finance for business purposes or short term personal loan India for various personal requirements.
As the banks can easily set the percentage for the BPLR on their own, they usually keep the rates attractive in order to allure new customers. But, you should keep this in mind that if you are an existing customer, then you may or may not get benefit from any change that has been made to the loan offers.
BPLR was introduced by the central bank or RBI as a remedy to the complex structure of the interest rates of loan. Usually, banks or financial institutions adjust the sub-prime lending rates with higher lending rates on retail customers like credit cards, vehicle and housing finance.
Banks are using this lending way in a beneficial way even for short term loans in order to avoid parking funds with RBI at 3.25% that may go costlier. Banks can lend funds to the corporate clients at Sub- PLR rate, which in turn helps to increase the profitability and security of bank funds. In case of any lending below BPLR, banks funds will not remain idle as the banks can lend it after receiving the approval of board.
According to the standard guidelines of the central bank or reserve bank of India (RBI), every bank has given the right to fix BPLR according to their choices. Most of the banks provide loans and advances at a lower rate than the BPLR i.e. prime lending rate of the bank to the customers, who avail the finance for business purposes or short term personal loan India for various personal requirements.
As the banks can easily set the percentage for the BPLR on their own, they usually keep the rates attractive in order to allure new customers. But, you should keep this in mind that if you are an existing customer, then you may or may not get benefit from any change that has been made to the loan offers.
BPLR was introduced by the central bank or RBI as a remedy to the complex structure of the interest rates of loan. Usually, banks or financial institutions adjust the sub-prime lending rates with higher lending rates on retail customers like credit cards, vehicle and housing finance.
Banks are using this lending way in a beneficial way even for short term loans in order to avoid parking funds with RBI at 3.25% that may go costlier. Banks can lend funds to the corporate clients at Sub- PLR rate, which in turn helps to increase the profitability and security of bank funds. In case of any lending below BPLR, banks funds will not remain idle as the banks can lend it after receiving the approval of board.
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