Who determines base rate?
Q. Which of the following statements is/are correct about base rate?
1. Banks can not lend money below the “base rate.”
2. It is determined by RBI.- Published on 31 Dec 15a. Only 1
b. Only 2
c. Both
d. None
ANSWER: Only 1
- Under base rate system, the individual bank is free to determine its own base rate.
- Bank is free to adopt a formula, as long as RBI feels it is consistent.
Banks have to publish the Base rate on their website.
- HDFC Bank, the country's second-largest private sector lender, has cut its base rate by 5 bps to 9.3% bringing its rate at par with State Bank of India.
