According to the SBI website, “Benchmark Prime Lending Rate (BPLR) revised as 13.45% p.a. w.e.f. 15.09.2022. Base Rate revised as 8.70% p.a. w.e.f. 15.09.2022.”
SBI had last hiked its base rate and BPLR on June 15, 2022 as per its website. These are the old benchmarks on which banks used to disburse loans. Now most of the banks provide loans on the External Benchmark Based Lending Rate (EBLR).
What is a bank’s base rate?
Base rate is the minimum interest rate at which a bank could lend to its customers who have their loans still under base rate regime. As a result, the overall interest rate of these old borrowers with floating rate loans like home loans will go up due to which they will either pay increased loan equated monthly instalments (EMIs) or will have their loan tenure extended.
Will other loan regimes be impacted?
This base rate hike is unlikely to remain limited to base rate only as we may soon see other benchmark rates like MCLR and external benchmark being hiked as well going forward. All borrowers who had taken a floating rate home loan between July 2010 and March 2016 and did not shift their loans till now to any new regimen like MCLR or EBR will be impacted from this rate hike.
What is Benchmark Prime Lending Rate?
The term “benchmark rate” refers to the standard rate used to calculate loan interest rates. According to the RBI, “Benchmark Prime Lending Rate (BPLR) means internal benchmark rate used to determine the interest rates on advances/loans sanctioned upto June 30, 2010.”
RBI increases repo rates
The Reserve Bank of India raised the repo rate, which is the main policy rate, by 0.5 percentage points in its policy review. Since hiking interest rates early this year, the RBI has increased rates three times in a row.