Deregulation of interest rates in India: History and Basics

Deepak Mohanty, ED of RBI gives a superb speech on the topic.

Here is a table showing how interest rates were deregulated in India:

Table 1: Evolution of Lending Rate Structure in India
Sep. 1990 The structure of lending rates was rationalized into six size-wise slabs. Of these, banks were free to set interest rates on loans of over Rs.2 lakh with minimum lending rates prescribed by RBI.
Apr-92 Slabs compressed into four.
Apr-93 Slabs compressed into three.
Oct. 1994 Lending rates for loans with credit limits of over Rs. 2 lakh deregulated.
  Banks were required to declare their Prime lending rates (PLRs).
Feb. 1997 Banks allowed to prescribe separate PLRs and spreads over PLRs, both for loan and cash credit components.
Oct. 1997 For term loans of 3 years and above, separate Prime Term Lending Rates (PTLRs) were required to be announced by banks.
Apr-98 PLR converted as a ceiling rate on loans up to Rs.2 lakh.
Apr-99 Tenor-linked Prime Lending Rates (TPLRs) introduced.
Oct. 1999 Banks were given flexibility to charge interest rates without reference to the PLR in respect of certain categories of loans/credit.
Apr-00 Banks allowed to charge fixed/floating rate on their lending for credit limit of over Rs.2 lakh.
Apr-01 The PLR ceased to be the floor rate for loans above Rs. 2 lakh.

Read the speech to understand the transition. He also shows the relation between lending rates and growth…

Advertisements

4 Responses to “Deregulation of interest rates in India: History and Basics”

  1. How Social Networking Can Make You Money From Home | Internet Marketing is Nuts! Says:

    […] Deregulation of interest rates in India: History and Basics … […]

  2. Alan Says:

    Great article,thought i would share this with you.

    Private Label Rights Special!

    “Discover How You Can Instantly Profit From New, Super High Quality 750 Traffic Tactics With Full Private Label Rights – For a Super Low Price…”

    WARNING! Only 500 Licenses Will Be Sold!……..

    To read more please vist Visit 1dollarmasterresalerights.com

  3. Humility Says:

    SAP major policies and implication

  4. sevierville urgent care Says:

    sevierville urgent care…

    […]Deregulation of interest rates in India: History and Basics « Mostly Economics[…]…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: