Rate of Interest on Home Loans
Reserve Bank of India had deregulated the interest rates on
advances sanctioned by Scheduled Commercial Banks, with effect from October 18,
1994 and these interest rates were determined by bank themselves with the
approval of their Boards, subject to Benchmark Prime Lending Rate (BPLR) and
spread guidelines.
The above guidelines based on the BPLR system have been replaced by new
guidelines on the Base Rate System issued vide circular dated April 9, 2010,
which have come into force with effect from July 1, 2010. In terms of the new
guidelines, banks determine their actual lending rate on loans and advances
with reference to the Base Rate. All categories of loans, except specified
exemptions, are priced only with reference to the Base Rate, which is announced
by banks after seeking approval from their respective Boards. The Banks are not
permitted to resort to any lending below the Base Rate.
This was stated by the Minister of State for Finance, Shri Namo Narian Meena in
a written reply to a question in the Lok Sabha today.
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