Although base rate for personal loans has become effective from the 1st of this month, there is hardly any difference with the previous BPLR method of lending.
The BPLR method of lending would lend well managed corporates at rates far lesser than the prime lending rate. The retail borrower always suffered in the instance. But base rate did not provide plenty of opportunities to the retail borrower as well.
Banks have declared their base lending rates (BLR) in various ranges. While the leading lenders, State Bank of India and ICICI Bank declared their BLR at 7.5%, HDFC Bank fixed it at 7.25% while Dhanlaxmi Bank declared its BLR at 7%.
While cost of funds is a leading factor in deciding the BLR of banks, it is not the only factor included in the calculation. Thus, while SBI has the cheapest source of funds from savings interest, other sources of funds also play an important part in BLR.
So the BLR computation would not be as much transparent as it was believed to be due to the complex calculations.
Hence it can’t be conclusively stated that the retail borrower has benefited.
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