Mumbai: The Reserve Bank of India (RBI) has deferred the introduction of base rate system, which will be the new benchmark lending rate for banks, by three months to 1 July.
“Concerns on base rate have been sorted out,” the central bank’s deputy governor Usha Thorat said.
Earlier, banks were expected to implement the base rate system from 1 April.
The central bank has proposed replacing the current benchmark prime lending rate (BPLR) with the base rate system, below which no banks would be allowed to give commercial loans.
Banks provide loans to many of their borrowers, including companies, below BPLR. The regulator wants banks to implement the new base rate system to ensure greater transparency.
BPLR and base rate will both continue until the complete implementation of the new base rate, State Bank of India chairman O.P. Bhatt said.
“Base rate is meant for new borrowers and we will have to take care of old borrowers also,” Bhatt, chairman of the country’s biggest public sector bank, said.
He said lending rates were unlikely to jump till May and the bank would review home loan rates by 31 March.