RBI says base rate adapts better to rate fluctuations
By Vaibhav Aggarwal
Aug 26, 2011
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The annual report released by Reserve Bank of India for they year 2010-11 has indicated that base rate system of lending has come out as a more transparent as well as effective mode of lending over its counterpart, the benchmark prime lending rate (BPLR).

The result has been made visible in the increasing amount of public acceptance being gained by base rate in both public as well as private sector banks since its inception in the banking system.

The report also said that while the response on base rate to stimulus offered by policy rate hike was slow in the intital days it increased pace over time during the period of December 2010-February 2011.

Another relevation has been the fact that the take of banks towards policy rate hikes has been a lot smoother following their shift to base rate system.


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