Which is better among the baserate and BPLR interest rates? | Differences between baserate and BPLR interest rates?

September 29th, 2010| Uncategorized.

Which is better among the baserate and BPLR interest rates? | Differences between  baserate and BPLR interest rates?


The banks had introduced the baserate in the market and the interest rates are same as the BPLR for the loans taken before July 1st. The banks should give the both BPLR and baserate interest rates to the customers. They should implement the base rate interests on the loans given from last year July 1st and they should implement the BPLR on the old loans. Even the people are given the opportunity of changing the interest rates from BPLR to baserate, they are not showing interest as they don’t have sufficient information and they don’t know which is profitable. The people are in a confusion that they should continue with the BPLR or baserate. The banks are not allowed to advice the customer to take a particular type of interest rates according to the laws. It is the responsibility of the banks to exploit the people about baserate interest rates. They are sending the letters to the loan borrowers to change in to the baserate and they are increasing the interest rates on the other side.

Old loans:

The banks had increased the BPLR rates by 50% and they made no changes in the baserate. As a result the interest rates of the old loan are increased. And so the new loans are very less compared to the old loans. It is the fact that the banks won’t keep the baserate as constant for long time. They should observe the baserates every three months and they should wait to make the changes in the baserates. They are now ready to increase the baserate in the second week of October and many banks are looking forward to announce their baserate. There is a chance of increasing the BPLR rates further instead of increasing the baserate. These changes result in the equity of baserate and BPLR. The RBI goal is to resemble the interest rates of the banks.

Retail loans:

The rates of the retail loans had increased as the banks had increased the BPLR rates. The interest rates will be more on the house, vehicle, education and personal loans. The interest rates of the new loans which are dependent on the baserate are same. As the BPLR rates are increased and the customers are in confusion whether to change into the new baserate are remain in the old BPLR rate. For example if the bank had given car loan for 10% interest rate when the BPLR rate is less than 2%. If the BPLR rate had increased from 12% to 12.5%, then the interest rate will change to 10.50%. The car loan is available for 10% interest on the baserate only. As there are more loans based on the BPLR rates, the banks will show interest in increasing the BPLR rates. There is a chance of high BPLR rates even though the banks had increased the baserate. So it is better for the people to change in to baserate from BPLR rates. The interest rates will be constant on the fixed rate interests.

Corporate loans:

Few banks had given loans to the corporate offices and companies for the interest rates

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