BASE RATE – CHECK OUT FOR THE LOAD
A |
fter the announcement of RBI to Switch the BPLR to Base Rate, all the Banks in India have affected the change with effect from 1st July 2010. A Base Rate is a minimum rate which the Bank can charge to its borrower. RBI’s definition of Base Rate has the following four components:
- Cost of deposits,
- Negative carry on CRR and SLR,
- Overheads costs and
- Returns on net worth,
All new loans sanctioned after 1st July and those falling due for renewal from 1st July, (except exempt categories as per RBI Guidelines) will now be priced with linkage to Base Rate. However, the final rate you pay is not just this rate, but an addition of tenor specific premium or load.
Most of the Base Rate announced till date ranges from 6.75% to 8.50%, the load from each Banks varies from 0.50% to 6.00%.
For example, the base rate of IDBI Bank Ltd is 8%. With a load of 0.75% for loans between Rs20 lakh and Rs30 lakh over 15 years, the final interest rate comes to 8.75% (base rate plus load). Similarly, for loans between Rs30 lakh and Rs50 lakh for the same period, the load is 1% and, thus, the final interest rate goes up to 9%. Kotak Mahindra Bank Ltd, on the other hand, has a lower base rate of 7.25% and a higher load of 1.25% for loans for salaried customers, irrespective of the amount and tenor.
Hence one needs to be very much cautious while availing the loan from the Bank. Ideally one should go for a loan that has low Base Rate and as well as the lowest load. Always keep in mind that the Base is variable component while Load is fixed component of the interest rate. Hence while the Base rate will go up and down, Load will always be constant. The best way is to choose the rate is lower load for the same Base Rate.
Table showing the Base Rate Per Annum for various Banks in India:
BANKS | BASE RATE Per Annum | BANKS | BASE RATE Per Annum |
State Bank of India | 7.50% | Punjab National Bank | 8.00% |
Bank of Baroda | 8.00% | Union Bank | 8.00% |
Central Bank of India | 8.00% | Bank of Rajasthan | 8.00% |
Indian Bank | 8.00% | UCO Bank | 8.00% |
IDBI Bank | 8.00% | Dhanlaxmi Bank | 7.00% |
Federal Bank | 7.75% | State Bank of Mysore | 7.75% |
Corporation Bank | 7.75% | Karur Vysya Bank | 8.50% |
Canara Bank | 8.00% | Indian Overseas Bank | 8.25% |
State Bank of Bikaner and Jaipur | 7.75% | South Indian Bank | 8.10% |
Karnataka Bank | 8.75% | J&K Bank | 8.25% |
DBS Bank | 7.00% | HDFC Bank | 7.25% |
Kotak Mahindra Bank | 7.25% | ICICI Bank | 7.50% |
Deutsche Bank | 6.75% |
Source: www. moneycontrol.com
