BANKING AFFAIRS

Detailed explanation-1: -The correct answer is Base Rate. Key Points The Base Rate is the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. It is the minimum interest rate of a bank below which it is not viable to lend.

Detailed explanation-2: -Definition: Base rate is the minimum rate set by the Reserve Bank of India below which banks are not allowed to lend to its customers.

Detailed explanation-3: -Also known as alternate base rate and ABR. A floating interest rate reference rate used by a lender in a loan agreement.

Detailed explanation-4: -What is Base Rate? Base rate is defined as the minimum interest rate set by the RBI below which Indian banks are not permitted to lend to their customers. Unless there is a government mandate, the RBI rule specifies that no bank may offer loans at an interest rate lower than the base rate.

Detailed explanation-5: -The BR is basically an interest rate that the bank refers to, before it decides on the interest rate to apply to your home loan. It is calculated against each bank’s cost of funds and Statutory Reserve Requirement (SRR), along with the borrower’s credit risk, liquidity premium, operating cost, and profit margin.