Base Rate - Bench Mark Prime Lending Rate

In this post we shall discuss two very important banking terms which are useful for Banking Exams. Those are Base Rate and Benchmark Lending Rate. Lets start with the definitions first.

BPLR (Benchmark Prime Lending Rate) :

The BPLR is the rate of interest at which commercial banks can lend money to EACH OTHER and to some large corporations. It is called benchmark rate or benchmark lending because it is commonly used to calculate other rates of interest.

Base Rate :

The Base Rate is the minimum interest rate for any bank. I mean, the bank cant lend you money for an interest less than  this Base Rate (you may assume that this is the Base of the Interest, so that you can call it as Base Rate). Ofcourse, some exceptions are also there. RBI allowed some cases where Banks can lend amount for interest below the Base Rate except  for DRI advances, They are loans to bank's own employees and banks' depositors against their own deposits etc.

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