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…
June 15, 2010 at 8:32 am
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June 16, 2010 at 8:49 pm
Great article,thought i would share this with you.
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