The move by most banks to fix the base rate between 7.5 and 8 per cent is set to increase the cost of borrowing for corporates, depending on the risk factor of the sectors they operate in.
The new lending system may change the way banks look at their loan portfolio and bring about a greater transparency in the pricing of their loans.
With the Reserve Bank of India expected to raise key repo and reverse repo rates in the first half of July to contain high inflation, a few corporate houses are yet to gauge the impact of the base rate impact.
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