What’s The New Base Rate?
- From April 1, 2010, banks will adopt a transparent cost-based system to set a reference rate for all loans
- No loan can be priced below the base rate. Banks will add charges for each loan category.
- This replaces existing BPLR, based on a bank’s perception. Banks’ lending rates were often below BPLR.
- The BPLR is unresponsive to overall interest rate changes and doesn’t reflect actual costs.
How Will Loan Customers Benefit?
- Consumers will be able to compare a bank’s minimum loan rate with what they are eventually paying
- Allows easier shopping around between different banks, breeds competition and fair pricing of products.
- As a base rate will be responsive to monetary policy, existing loan consumers will benefit from changes
- The devil lies in the detail. Will banks implement the spirit behind the changes?