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RBI group likely to moot two PLRs

Source: PTI
September 16, 2009 19:59 IST
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The Reserve Bank working group, constituted to revisit benchmark prime lending rate (BPLR), is likely to recommend two types of PLRs and may put a ceiling on banks' sub-PLR lending, a source said.

The working group had received suggestions from Indian Banks' Association (IBA) and other industry experts to rework the existing BPLR system and had formed a draft report. The panel met on Wednesday to discuss the report.

The working group, headed by RBI executive director Deepak Mohanty and comprising external experts and IBA, is likely to submit the final report to RBI Governor, D Subbarao by the end of this month, a banking industry source told PTI.

"The panel has accepted two PLRs -- one for retail and one for wholesale borrowers. This is most likely to be inducted in the final report. Also, the committee has plans to put a ceiling on banks' sub-PLR lending to enhance transparency in lending," the source said.

Though exclusion of home loans from the BPLR's fold was under consideration, the working group is unlikely to accept this suggestion as it feels that double BPLR system will alone help to bring transparency in banks' lending.

"They may not accept it (exclusion of home loans from BPLR). They feel that splitting prime lending rate to two types will be enough to safeguard the interests of customers," the source said.

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