New Delhi: If you are planning to take a loan perhaps this is the best time to go for it. Interest rates have become more transparent as banks switch to new interest rates system called Base Rate. So what exactly is Base Rate?
Starting July 1, 2010 you will know exactly the lowest interest rate you are suppose to pay for your loans as banks switch into a new interest rates system called the Base Rate.
Replacing the Benchmark Prime Lending Rate (BPLR), Base Rate is touted as a transparent system and it will serve as the minimum rate a bank can charge its customers.
Earlier under Benchmark Prime Lending Rate system, banks arbitrarily charge its existing and new customers at different rates. But with Base Rate that practice is finally over.
While banks cannot charge below its Base Rate they can still charge higher depending on market conditions.
On Tuesday, the country's largest banker State Bank of India led the pack by fixing its base rate 7.5 per cent. HDFC has pegged it at 7.25 per cent while PNB's is fixed at 8 per cent.
As banks migrate into new system, experts says banks are unlikely to tinker with existing loan rates any time soon, which means your current EMIs are unlikely to get affected for now.