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

    • HDFC Limited Home Loan
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      HDFC LIMITED is the bank where i have taken the housing loan the loan amount they have offered was good and satisfactory added on that the documentation process was simple and pretty simple documents. I got the loan within one day, the rate of interest was nominal.
      Was this review helpful? 0
      , bangalore
      Reviewed on Apr 20, 2019
    • DHFL Home Loan
      "Very good service"
      0.5 4.0/5 "Great!"
      I had taken a Home Loan from DHFL LTD a long time back and the loan is still running. The loan amount has been sufficient but the interest rate with them has been quite high, where they had not reduced the interest rate as well. The processing fee and charges which they had made has also been high when compared with the other banks.
      Was this review helpful? 0
      , faridabad
      Reviewed on Apr 20, 2019
    • HDFC Limited Home Loan
      "Interest rate should be reduced"
      0.5 4.0/5 "Great!"
      My housing loan process was simple with HDFC Ltd, they took only 3 working days to verify and sanction the amount, they didn't ask any guarantor for my loan, but I feel the interest is bit higher, I took the amount of Rs. 5 lakhs for the duration of five years.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Apr 20, 2019
    • ICICI Bank Home Loan
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      I have applied or the housing loan with the ICICI BANK the documentation process was simple and easy to get the loan they have given the 95% of value as a loan amount. The duration for repaying the loan is for 20 years and using from last 2 years. The rate of interest was 8.6% which was nominal.
      Was this review helpful? 1
      , pune
      Reviewed on Apr 19, 2019
    • LIC Housing Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I took my housing loan with LIC HOUSING FINANCE previously, They gave me sufficient loan amount based on the requirement, but i felt they have charged me high rate of interest and even they have charged me processing fee high, so i have done balance transfer to other bank.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Apr 19, 2019
    • Bajaj Finserv Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I did balance transfer from one bank to Bajaj finserv for housing loan, the loan amount was sufficient, but rate of interest i felt was less compare to other bank loan, the rate of interest they have charged me up to 8.85% which was nominal, everything is good but i did not like one thing ,like after doing balance transfer i came to know that it is mandatory to pay insurance for premium it use to get lock after paying insurance, i can not do in future balance transfer .
      Was this review helpful? 0
      , hyderabad
      Reviewed on Apr 19, 2019
    • Indiabulls Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I hold my housing loan with Indiabulls for an while. They have given me loan on time without any delay, their service was good. The process in getting loan was simple, i got loan on time. Their rate of interest was nominal, still this loan is running.
      Was this review helpful? 1
      , new delhi
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "Very good"
      0.5 4.0/5 "Great!"
      Last 4month back I took one home loan from HDFC Limited , but I am not satisfied with their rate of interest since it is little high , and loan amount is 30L I am satisfied with loan amount and and EMI amount is 25K and tenure is 25years , but their customer service is not much good ,and response not at a time.
      Was this review helpful? 0
      , chennai
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "Best service"
      0.5 4.5/5 "Excellent!"
      I hold my housing loan with HDFC LIMITED for an while, their service is good, but not sure about the rate of interest like every 2-3 months they are increasing my limit up to 0.05% i need to check with the customer care regarding this, the loan amount was sufficient, they have not charged me processing fee.
      Was this review helpful? 0
      , bangalore
      Reviewed on Apr 19, 2019
    • IIFL Home Loan
      "NOT SATISFIED"
      0.5 1.0/5 "Really Bad"
      I have previously used the housing loan with the INDIA INFOLINE HOUSING FINANCE LTD and transferred to another bank because the rate of interest was higher. They have offered the pre approved so taken. There are hidden charges applicable also it is floating rate of interest with this bank which was 32% which am not happy.
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "GOOD"
      0.5 4.0/5 "Great!"
      The documentation process was easy and simple with the HDFC LIMITED and housing loan was taken before few days. The rate of interest was lesser so transfered the loan with this bank. The duration is for 30 years to repay the loan. There is a pre closure option with this loan.
      Was this review helpful? 1
      , mumbai
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "Very good"
      0.5 4.0/5 "Great!"
      I am satisfied with loan amount of 8L with the rate of interest is 8.65% , EMI amount is 6769 rupees and tenure is 20years. It was taken last two years back from HDFC LIMITED and their overall service is good but I would like close this loan after 3 to 4 months.
      Was this review helpful? 1
      , new delhi
      Reviewed on Apr 17, 2019
    • Bank Bazaar Home Loan
      "balance transfer"
      0.5 4.0/5 "Great!"
      i like your offer...t is the first time experience with the Bankbazaar.com and i have a good experience with this channel. I prefer using it through the mobile application as the application is simple and user friendly to access. The customer service is good.
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 17, 2019
    • Axis Bank Home Loan
      "Process is good"
      0.5 5.0/5 "Blown Away!"
      My home loan is with Axis Bank and the process to get the loan is good. The disbursement happened on time and the customer support and response is good. The documentation was also a smooth process. The rate of interest and processing charges is normal.
      Was this review helpful? 0
      , chennai
      Reviewed on Apr 17, 2019
    • IDBI Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I took housing loan with IDBI bank for an while, the loan amount which they have given me was good, it was sufficient based on my requirement, the rate of interest and their processing fee which they have charged me was nominal, AS it is government bank their service is not that up to the mark, but the interest rate was less so i applied.
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 17, 2019
    • LIC Housing Home Loan
      "Interest rate should be reduced"
      0.5 4.0/5 "Great!"
      LIC housing is good but interest is the concern, I took the amount Rs. 20 lakhs for 20 years. They quoted 10.8% its a floating one, they didn't revise the interest as per the RBI guideline. But they do have balance transfer, part payment and other options.
      Was this review helpful? 0
      , chennai
      Reviewed on Apr 17, 2019
    • Aavas Financiers Limited Home Loan
      "Very good"
      0.5 4.0/5 "Great!"
      My experience is good with Aavas finance home and It was taken one year back. My loan amount is 10L and rate of interest is 8.35%, am paying emi amount is Rs.11,648. Recently one month back my emi amount got decreased and I paid only 9441 rupees. The tenure is 20years and everything is nominal with this loan.
      Was this review helpful? 1
      , palanpur
      Reviewed on Apr 17, 2019
    • LIC Housing Home Loan
      "Avrage"
      0.5 3.0/5 "Satisfactory"
      I have taken one home loan from lic housing finance last 3years back , and my loan amount is 10L and tenure is 15years ,emi amount is 10700K and rate of interest is 9.5% is high , and their customer service is good , and response is also good, But I am not much happy with this loan,
      Was this review helpful? 3
      , hyderabad
      Reviewed on Apr 16, 2019
    • Punjab National Bank Home Loan
      "Part payment option is good"
      0.5 4.0/5 "Great!"
      I have my home loan also with Punjab national bank. The customer support is good and there are no hassles in the process. The interest rate and processing charges are nominal. The best about this bank is there is a part payment option so I close my loan at any time without any charges.
      Was this review helpful? 2
      , new delhi
      Reviewed on Apr 16, 2019
    • Tata capital Home Loan
      "Excellent services"
      0.5 5.0/5 "Blown Away!"
      It was a pretty smooth process with Tata capital for the home loan. The customer services are good and they were responsive through the process. The rate of interest is 8.35% fixed for seven years. After which the interest rate would be as per the RBI rule. The processing fee was normal, it is of 5 to 10K.
      Was this review helpful? 1
      , pune
      Reviewed on Apr 16, 2019
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