BANKS LIKELY TO FIX BASE RATE AT 8.5-9.5%

With less than 40 days to go for the implementation of the new base rate system, banks are still working on fixing the rates and assessing the likely impact on their portfolios. According to the sources, the base rate could be fixed at about 8.5-9.5 per cent by many banks.

In case of large banks with good current account and savings accounts (CASA), it might come down a little say experts.

According to Reserve Bank of India, banks need to switch over to the new loan pricing system from July 1, from the existing Benchmark Prime Lending Rate (BPLR), which is in the range of 11.5-12.5 per cent.

The actual lending rate charged to borrowers would be the base rate plus borrower-specific charges including operating costs, say the draft guidelines on the RBI portal.

Source: http://www.thehindubusinessline.com/2010/05/22/stories/2010052252360600.htm