Public sector banks have finalised the formula for arriving at the new benchmark prime lending rate (PLR) as prescribed by the Reserve Bank of India. Syndicate Bank is among PSU banks expected to shortly announce the new rates on this basis.
The Syndicate Bank chairman and managing director, Mr Michael Bastin, confirmed that the new formula had been finalised. He said, "This formula will now act as the basis for fixing all future PLRs." PLR is the best lending rate banks offer to their prime customers.
The new formula is also expected to be adopted by the private sector banks.
The formula has fixed weightings for capital, deposit funds, costs for maintaining cash reserve ratio balances, and profit mark-up. The details have not been disclosed. The pricing for loans from banks would be determined after factoring in a risk premium. The new formula was unlikely to bring about substantial changes in the current level of PLR, according to sources here.
