As inflation seems to have taken over the world economy, several countries are executing measures to fade it. The United States, for example, keeps hiking its interest rates to rid it. Similarly, India has resorted to lifting its Benchmark Prime Lending Rate higher.
SBI Steps Up BPLR
State Bank of India, the largest lender in the country, hoisted its BPLR on Wednesday. Benchmark Prime Lending Rate, which stood at 0.7 percent, went up to 13.45 percent after getting hiked by the bank. The new rate policy is to take effect come September 15.
According to the bank, this new strategy will reduce borrowing in the country. Because it seeks to mitigate monetary circulation in the economy, and the only way to actualize it is by enabling this policy. Money flow can only subside if borrowers are discouraged by a high interest rate.
Since the SBI disburses most loans, it is the only thing between loans and borrowers. Therefore, it is in a position to alleviate constant borrowing using any required method such as this. Currently, BPLR is 12.75 percent higher compared to before.
The bank last modified it in June. More information about the new policy is on the bank’s website. On the site, it says the rate will kick in on Thursday. Also, the rate will go up from its usual 0.7% to 13.45%.
SBI Lifts Base Rate
Furthermore, the bank increased its base rate by nearly the same points. The EMI got reposed at 8.7 percent from its previous position. According to the bank, it will pitch in on the same day as the BPLR.
Entities that applied for or will be applying for a loan at the base rate would be required to refund at the new base rate. These policies will aid reduce the amount of money in circulation. And it applies to all lenders or microfinance organizations within India’s jurisdictions.
There are several benchmarks via which banks in India give out loans to borrowers. These include the Benchmark Prime Lending Rate (BPLR), Base Rate (BR), External Benchmark-Based Lending Rate (EBLR), and Repo-Linked Lending Rate (RLLR).
BPLR and BR are the past standards used by banks to release loans. EBLR and RLLR are the new benchmarks adopted in addition to the old ones.
SBI makes quarterly changes to the base rate and BPLR. In most cases, commercial banks or other banks abide by the principles initiated by the state bank. However, there was a rise in the benchmark lending rate before the RBI’s meeting.
Research Bank of India will be holding a meeting over its monetary policy in a few days. The committee is likely to agree on a further increment of interest rates and other measures to eradicate inflation. The dates for the meeting fall between September 28 and September 30.
