Central Bank of India has fixed the base rate at 8% after taking into account the cost of deposits and other relevant variables. This Base Rate will be effective from 1st of July 2010. The Base Rate is applicable for all new loans and for those old loans that come up for renewal. Existing loans based on BPLR System may run till their maturity. In case the existing borrowers want to switch to the new system before expiry of the existing contracts, they may approach the Bank for switch over to new Base Rate System. The Bank will not charge any fee for such switch over.
All categories of loans will henceforth be priced only with reference to the Base Rate, except for (a) DRI Advances; (b) Loans to Bank’s own employees and (c) Loans to Bank’s depositors against their own deposits.
Further, for Crop loans and Export Credits where interest subvention is provided by the Government, the rate of interest chargeable in such cases by the Bank may be lower than the Base Rate. Such lending will not be construed to be violative of the Base Rate guidelines.
In case of Restructured loans if some of the WCTL, FITL, etc. need to be granted below the Base Rate for the purposes of viability and there are recompense etc. clauses, such lending will not be construed to be violative of the Base Rate guidelines.
The computation of the Base Rate does not reckon certain parameters that went into the computation of the Benchmark Prime Lending Rate. It is the Bank’s endeavour that the actual interest rate applicable to borrowers does not change, particularly for small and medium enterprises and home loan borrowers.