A "low interest" loan shouldn't mean you have very little interest in paying it back!
  • What is Base Rate?

    The concept of base rate was introduced on July 1, 2010, at all banks across India. Before the base rate system, BPLR (Benchmark Prime Lending Rate) was employed. However, with the implementation of base rate system, the credit pricing became more transparent. Here is an article that explains in-depth about the base rate and other related information, which you might require for assistance to comprehend better.

    The base rate is the minimum rate of interest that is set by a country’s central bank for lending a loan. This rate is usually taken as the standard interest rate by all the banks functioning in that country. Once the base rate is announced by the central bank, no bank is permitted to offer any type of loan to its customers at a rate that is lower than the base rate that has been set by the central bank of a nation.

    Why Is Base Rate System Used?

    The credit market in the earlier days was not that transparent. There used to be some segments that were hidden or closed. There was no clear information how much interest rate a bank actually charged for a loan.

    To bring transparency to the credit field and to make sure that the banks charge a lower interest rate, the RBI implemented the notion of base rate across all banks in India.

    Who Calculates The Base Rate In India?

    The RBI (Reserve Bank of India) calculates the base rate in India. The RBI sets this to bring uniform rates to all banks in India.

    A base rate comprises of all the elements of lending rates, which are common among the borrowers of various categories.

    Note: Lending rate is the rate of interest that a bank lends to its customers. A lending rate includes the operating cost of a product, tenor premium, credit risk premium, and the borrower-specific cost. Therefore, it differs from one segment to the other.

    How Is Base Rate Calculated?

    The calculation of base rate is based on different factors. A few of them are:

    • Deposit cost
    • Administrative cost
    • Unallocated overhead cost
    • The amount of profit a bank earns in the last financial year

    What Is The Current Base Rate Of RBI?

    According to the update done on 5 January 2018, the current base rate of RBI is 8.65 - 9.45%

    Current Base Rate Of Banks

    The 2018 or current base rate of banks are as follows:

    Name Of The Bank Previous Base Rate Current Base Rate
    Axis Bank 9.35% 9.25%
    HDFC Bank 8.90% 8.85%
    ICICI Bank 9.35% 8.85%
    Yes Bank 10.50% 10.25%
    Dhanalakshmi Bank 11.50% 11.40%
    Karur Vysya Bank 10.30% 10.10%
    Andhra Bank 9.70% 9.55%
    UCO Bank 9.95% 9.70%
    Dena Bank 9.70% 9.60%
    Federal Bank 9.95% 9.63%
    SBI (State Bank Of India) 8.95% 8.65%
    Bank Of Baroda 9.60% 9.15%
    Karnataka Bank 10.50% 10.25%
    IndusInd Bank 10.60% 10.55%
    Allahabad Bank 9.95% 9.70%
    HSBC Bank 9.00% 8.90%
    IDBI Bank 9.65% 9.50%
    Kotak Mahindra Bank 9.20% 9.10%
    Canara Bank 9.65% 9.40%
    Indian Bank 9.65% 9.45%
    South Indian Bank 10.00% 9.90%
    PNB (Punjab National Bank) 9.60% 9.35%
    Union Bank of India 9.20% 8.95%
    Tamil Nadu Mercantile Bank 10.30% 9.75%
    Vijaya Bank 9.85% 9.65%
    United Bank of India 9.90% 9.65%
    Syndicate Bank 9.60% 9.50%
    State Bank of Travancore 10.15% 9.95%
    State Bank of Mysore 9.85% 9.65%
    State Bank of Hyderabad 9.85% 9.65%
    State Bank of Bikaner & Jaipur 9.85% 9.65%
    State Bank of Patiala 9.85% 9.65%
    Shamrao Vithal Cooperative Bank 9.65% 9.50%
    Laxmi Vilas Bank 10.95% 10.50%
    Karnataka Bank 10.50% 10.25%
    ING Vysya Bank 9.70% 9.45%
    Indian Overseas Bank 9.50% 9.45%
    Corporation Bank 9.70% 9.65%
    Bank of India 9.55% 9.45%
    Jammu & Kashmir Bank 9.85% 9.50%
    Oriental Bank of Commerce 9.65% 9.45%
    Development Credit Bank 10.64% 10.44%
    Deutsche Bank 9.35% 9.05%
    Punjab & Sind Bank 9.95% 9.70%
    Catholic Syrian Bank 10.50% 10.25%
    City Union Bank 10.20% 9.75%
    Nainital Bank 10.00% 9.75%
    RBL Bank 10.35% 10.10%
    Bandhan Bank 11.75% 12%
    Bank of Maharashtra 9.70% 9.60%

    Applicability Of The Base Rate

    • Every loan category should be priced based on the base rate that has been set by the Reserve Bank of India. But a few loans can be priced without referring to the current base rate. These include the DRI advances, loans to a bank’s depositor on their deposits, and loans to a bank’s employees.
    • The base rate set by the central bank or the RBI also serves as a reference benchmark for the floating rate of a loan.
    • Any modifications in the base rate are applicable to all the existing loans that are associated with the current base rate.
    • The base rate set by the central bank is always minimum. Therefore, no bank is allowed to give a rate below than what is set to its customers.

    It is mandatory for every bank to review its base rate on a quarterly basis. This action has to be taken only after the ALCOs (Asset Liability Management Committees) or the board approves it. Since the primary intention of implementing the base rate system is to sustain transparency in the prices of a lending product, every bank has to reveal its base rate details at all the branches and their official websites too.

    Any modifications in the base rate have to be conveyed to the public frequently via appropriate channels. In addition, it is compulsory for all the banks to give proper details to the RBI regarding the minimum & maximum lending rates on a quarterly basis.

    How Does Base Rate Affect The Corporate Borrowers?

    Earlier when BPLR (Benchmark Prime Lending Rate) system was employed, large corporates enjoyed rates as low as 3% – 6%. But ever since the concept of base rate has been implemented, no bank is allowed to lend a loan below the base rate.

    How Does Base Rate Affect The Retail Customers?

    Well, the impact on a retail customer depends. It could either increase or decrease by 25 basis points compared to the present interest rate he/she enjoys. However, this change will not impact any of the existing customers.

    Note: 100 Basis Points = 1%

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    Home Loan Reviews

    • LIC Housing Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have taken holding my housing loan with LIC housing finance long back, they had given me good sufficient loan amount as per my requirement, the rate of interest they have charged me was nominal, so far i did not face any issue, i closed the loan amount my additional charges got waived off.
      Was this review helpful? 1
      , jaipur
      Reviewed on May 25, 2019
    • Axis Bank Home Loan
      "Good Service"
      0.5 4.0/5 "Great!"
      I have taken Home Loan directly through Bank.The loan amount was 33.25 lakhs for the tenure of 20yesrs ,This loan still is active ,The rate of interest and processing fee was nominal ,The agent gave all the information about the loan process clearly ,The loan got sanctioned on time ,the loan amount was sufficient.
      Was this review helpful? 1
      , chennai
      Reviewed on May 25, 2019
    • LIC Housing Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I have taken a home loan in LIC HOUSING FINANCE for more than 1 year. As per my requirement I received a loan amount for the duration of 20 years. The rate of interest is nominal and the processing fee is applicable. On time the loan got sanctioned from the bank.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 25, 2019
    • Allahabad Bank Home Loan
      "Customer friendly with low interest charges & great service"
      0.5 5.0/5 "Blown Away!"
      I have home loan with Allahabad bank, the process was customer friendly. They sanctioned the loan amount within 10 days, the rate of interest is nominal as compared to other banks. I took the loan amount of Rs.25 lakhs for the duration of 15 years.
      Was this review helpful? 0
      , vadodara
      Reviewed on May 25, 2019
    • HDFC Limited Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I had been holding my home loan with HDFC LTD, the loan amount they have given me was sufficient and the rate of interest they have shared me was nominal they have charged me low as it is nationalized bank, and there processing fee was there or not i have no idea, there overall service was good, there was no hidden charged in this loan.Now i have successfully closed this loan.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on May 25, 2019
    • LIC Housing Home Loan
      "Good loan services"
      0.5 2.0/5 "Expected more"
      LIC home loan service is not so good. The interest rate is low in LIC. They have sanctioned the loan very late. They have broker to sanctioned the loan and the LIC employee don't deal with the customers directly. The brokers will get money from the customer. If the customer applies the loan directly, the LIC people will reject the loan.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 24, 2019
    • review Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have taken my housing loan with Bajaj finance limited , the loan amount which they have given to me was sufficient , it was as per my requirement, they have help me out when it was on emergency case, they ask for the documents and quick they sanction my loan, the rate of interest i had some confusion, like every time they use to increase interest , now it is 11.5% which is nominal,i has been 5-6 months only i have taken this loan.
      Was this review helpful? 0
      , pune
      Reviewed on May 23, 2019
    • HDFC Limited Home Loan
      "Easy processing loan"
      0.5 5.0/5 "Blown Away!"
      I have bought home loan in HDFC Ltd since i know the people working over there, i have chosen this bank. There is a very quick loan process. I applied the loan amount of Rs. 62 lakhs which is a joint home loan and they have sanctioned the same. The processing fee and the interest rates are nominal. I used to pay the EMI through auto deduction.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 23, 2019
    • Canara Bank Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I had applied for a home loan with CANARA BANK and to get my application processed it has not took a long time. There was no delay. The interest rates moderate because they keep on changing the rates . Customer service is very good they are very professional .
      Was this review helpful? 1
      , ghaziabad
      Reviewed on May 22, 2019
    • HDFC Limited Home Loan
      "Good home loan service"
      0.5 5.0/5 "Blown Away!"
      Taken my home loan from HDFC ltd. Bought my loan 10 years back. I had a salary account with them, hence i have selected this bank. I have bought the loan amount of Rs. 5.50 lakhs. I am paying the EMI amount of Rs. 6800. I have selected the tenure period of 20 years. I have paid the processing fee of Rs. 6000.
      Was this review helpful? 0
      , vadodara
      Reviewed on May 22, 2019
    • HDFC Limited Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I have taken Home loan through HDFC LTD which i have directly applied with bank The .rate of interest and the processing fee was nominal .I have applied for the loan amount of 25lakhs for the tenure of 12years ,still loan is active ,The agent gave all the information about the loan process .
      Was this review helpful? 1
      , bangalore
      Reviewed on May 21, 2019
    • HDFC Limited Home Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I have taken a home loan in HDFC LTD. The process was done on smooth and received a loan amount 12 lakhs for the duration of 10years. The rate of interest and processing fee is nominal in this bank.The good which I would like to share is documentation process was done on easy.
      Was this review helpful? 1
      , chennai
      Reviewed on May 21, 2019
    • review Home Loan
      "Average Service"
      0.5 3.0/5 "Satisfactory"
      I had taken my Home loan from GIC HOUSING FINANCE LTD and the process in getting the loan was pretty much simple where it just took two weeks for the disbursement of the loan amount. The interest rate with them is also pretty good but after getting loan the response from their end has not been that good. They don't have a mobile application or a website to do things online.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 21, 2019
    • HDFC Limited Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I have taken a home loan in HDFC bank for more than a year. As per my expectation I received a loan amount for the duration of 15 years. The customer service is good and support on time. The rate of interest is good and low when compare to other bank. The fee also applicable and nominal.
      Was this review helpful? 0
      , indore
      Reviewed on May 21, 2019
    • review Home Loan
      "Need to decrease charges"
      0.5 3.0/5 "Satisfactory"
      I am using the home loan with GIC HOUSING FINANCE LTD since from last last year, as per my expectation I received a loan amount for the duration of 24 years. The rate of interest is high when compare to other.The fee is nominal. On time I received a loan amount.
      Was this review helpful? 0
      , new delhi
      Reviewed on May 20, 2019
    • ASPIRE HOME FINANCE CORPORATION LIMITED Home Loan
      "Best Service"
      0.5 2.0/5 "Expected more"
      I have taken Home loan through Aspire Home Finance corportation Limited .I have applied for the loan amount of 4 lakh for the tenure of 10years ,The rate of interest and processing fee was high ,loan amount got sanctioned on time it was sufficient,The agent gave all the relevant details and also submitted documents on time .
      Was this review helpful? 0
      , thane
      Reviewed on May 20, 2019
    • HDFC Limited Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I have taken Home loan through HDFC Ltd through Online .The service is good so far i have taken the loan amount of 50lakhs for the tenure is 30yearrs ,still the loan is active ,The rate of interest and processing fee was nominal ,I have submitted documents and the agent gave all information about the loan process .The agent was good ,loan amount got on time,it was sufficient as welll.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 20, 2019
    • LIC Housing Home Loan
      "Percentage should be reduced"
      0.5 3.0/5 "Satisfactory"
      I have housing loan from LIC, as per my experience the interest rate is huge as compared to others. In 2014 I took the loan amount around Rs 30 lakhs, the agent came to my place and completed the documentation process, it would be if they reduce the interest.
      Was this review helpful? 0
      , lucknow
      Reviewed on May 20, 2019
    • DHFL Home Loan
      "Interest rate should be reduced"
      0.5 3.0/5 "Satisfactory"
      Taken my housing loan from DHFL. So far i never had a chance to speak with their call centre people. When i had sanctioned my loan the interest was 10.35% which is a floating interest rate. They have charged me some processing fee. Total tenure period of the loan is 20 years. Within a month, they have sanctioned the loan. Initially, sanctioned the loan was a quick enough but disbursing the amount is took some time. The loan is easy to get sanctioned.
      Was this review helpful? 0
      , thane
      Reviewed on May 20, 2019
    • HDFC Limited Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have been taken my housing loan with HDFC LIMITED a while ago, the loan amount which they have given to me was sufficient, the rate of interest they have charged me was sufficient, the processing fee they have charged me up to 8000 which was minimal, still this loan is running, so far i did not face any issue.
      Was this review helpful? 0
      , gurgaon
      Reviewed on May 20, 2019
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