BPLR (Benchmark Prime Lending Rate):

In banking parlance, the BPLR means the Benchmark Prime Lending Rate. BPLR is the interest
rate that commercial banks normally charge (or we can say they are expected to charge) their
most credit-worthy customers. Although as per Reserve Bank of India rules, Banks are free to
fix Benchmark Prime Lending Rate (BPLR) for credit limits over Rs.2 lakh with the approval of
their respective Boards yet BPLR has to be declared and made uniformly applicable at all the
branches. The banks may authorize their Asset-Liability Management Committee (ALCO) to
fix interest rates on Deposits and Advances, subject to their reporting to the Board immediately
thereafter.

Need for Replacement: While initiating the move to replace the existing system of BPLR, RBI
felt that the existing lending rate system had lost relevance and hindered effective transmission
of monetary policy signals. For example, RBI reduced its benchmark lending rate by 425 basis
points in the last one year, but banks reduced their BPLR by about 200 basis point cut. This was
mainly because bulk of their lending was below their BPLR. Although, prime rates (read BPLR)
of Indian banks ranged between 11 percent and 15.75 percent, yet three-fourths of their
total loans are made below these levels because of competitive pressures in the fragmented
banking sector.

Base Rate:
It is the minimum rate of interest that a bank is allowed to charge from its customers. Unless
mandated by the government, RBI rule stipulates that no bank can offer loans at a rate lower than
BR to any of its customers.
Calculation:
A host of factors, like the cost of deposits, administrative costs, a bank's profitability in the
previous financial year and a few other parameters, with stipulated weights, are considered while
calculating a lender's BR. The cost of deposits has the highest weight in calculating the new
benchmark. Banks, however, have the leeway to take into account the cost of deposits of any
tenure while calculating their BR. For example, SBI took costs of its 6-month deposits into
account while calculating its BR, which it has fixed at 7.5%.

Base rate of banks are as follows:

Banks Base Rates in Oct, 2010
SBI 7.6%
Allahabad bank 8.5%
Andhra bank 8.5%
Bank of baroda 8.5%
Bank of india 8.5%
Canara bank 8.5%
Central bank of india 8.5%
Dena bank 8.25
Indian bank 8.5%
Indian overseas bank 8.5%
Oriental bank of commerce 8.5%
Punjab national bank 8.5%
Syndicate bank\ 8.5%
Uco bank 8.5%
United bank of india 8.25%
Union bank of india 8.5%
Vijaya Bank 8.5%
ICICI Bank 7.75%
HDFC Bank 7.5%
Kotak Mahindra Bank 7.5%
ING Vysya Bank 7.75%
Axis Bank 7.5%
Indusind Bank 7.5%
Yes Bank 7%