RBI seeks benchmark rate data on loans from banks before credit policy announcement

The Reserve Bank of India (RBI), in its pre-credit policy meeting, has sought data from all banks on differential prime lending rates (PLR) charged to the customer.

Most banks have different benchmarks for different retail loans. For example, some banks have a separate home loan PLR, an auto loan PLR, and so on. However, the RBI had wanted the banks to have one benchmark PLR (BPLR) and charge a spread over that depending on their cost of funds and margins.

This data on differential PLRs is expected to bring more transparency into the pricing of retail loans. It is very likely that RBI may reiterate the need to maintain a single BPLR and disclose cost details to the customer while charging an interest rate for a particular loan, especially in the floating rate segment.

According to the banking sources, the move will target banks where this practice of differential rates is widespread.