The Hindu Business Line : 'Multiple PLRs will lead to lending transparency'

MUMBAI: The multiple prime lending rate (PLR) system with a cap on advance rates, which are likely to be recommended by a Reserve Bank panel, would bring more transparency in the lending operations, bankers said.

“This (a ceiling on the sub-PLR advances) is a welcome move. Capping the sub-PLR loans will help to avoid undue competition in the market. There will be more transparency and relevance to BPLR mechanism in the industry,” Union Bank of India DGM Corporate Banking Mr R G Kelkar said.

At present larger banks, with deep pockets, woo prime customers offering loans at lower rates, thereby putting pressure on their smaller competitors. Discriminating pricing of wholesale and retail loans will help to develop more customer-confidence.

The double-PLR system will also help banks to price their advances in a better way, Mr Kelkar said. The RBI panel, headed by RBI Executive Director Mr Deepak Mohanty and comprising external experts and Indian Banks Association, is understood to have moot ed two PLRs - one for retail and one for wholesale borrowers in its draft report which is most likely to be included in the final report.

The RBI-group is likely to submit its report to apex bank Governor, Dr D Subbarao by the end of this month. - PTI

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