INDIAN Bank Base Rate:An Overview
AbstractThe paper deals about the issues arising out of implementing base rate for Indian banks. With effect from July 1st, 2010, all banks are supposed to lend at base rate or minimum level of interest rate to customers. The net impact of this for retail customer will not be much as cost of funds for banks are not going to change much and cost of funds determine base rate. Big corporates will be biggest losers as they had advantage of getting loans at sub-base rates. Biggest gainers will be small and medium firms who were getting raw deal earlier from banks. Banks may lose market share in short term but there is going to be greater transparency and trickling down of policies made by RBI across banks due to base-rate system. Game theory has been applied to explain the base rate transition scenario in the paper.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 25667.
Date of creation: 21 Sep 2010
Date of revision: 28 Oct 2010
Publication status: Published in Niveshak , IIM Shillong Finance Magazine 9.3(2010): pp. 12-14
Base Rate; Private Bank; BPLR; Game Theory; Net Income Margin(NIM);
Find related papers by JEL classification:
- G20 - Financial Economics - - Financial Institutions and Services - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-23 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- International Monetary Fund, 2004. "Interest Rate Volatility and Risk in Indian Banking," IMF Working Papers 04/17, International Monetary Fund.
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