Base rate and BPLR are the old benchmarks of the bank based on which the bank gives loans to the people. New loans are given on the basis of External Benchmark Based Lending Rate (EBLR) or Repo Rate Linked Rate (RLLR). An increase in Base Rate and BPLR will increase the installment for those whose loans are linked to these benchmarks. BPLR was calculated on the basis of average cost of funds. There was a lack of transparency in this. This is the reason why RBI had brought the base rate in the year 2010. Base rate is the minimum interest rate at which banks can give loans. Loan cannot be given at a rate below this. In April 2016, RBI introduced Marginal Cost of Funds Based (MCLR) instead of Base Rate.
RBI Repo Rate: Repo rate increased again, know how much the loan EMI will increase
Banks made loans expensive
MCLR is an internal benchmark for a financial institution. The minimum interest rate for the loan is fixed in the MCLR process. MCLR is the minimum interest rate at which a bank can offer a loan. The country’s largest bank SBI has once again made the loan (SBI interest rate) expensive. SBI recently increased the MCLR by 0.10 per cent for all tenures. The bank has increased MCLR twice this year. RBI had recently increased the repo rate for the sixth time. After this, many banks have made the loan expensive.
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