BANKING AFFAIRS

Detailed explanation-1: -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-2: -a minimum interest rate on which financial institutions base the rates they use for lending.

Detailed explanation-3: -The prime rate is the interest rate that commercial banks charge creditworthy customers and is based on the Federal Reserve’s federal funds overnight rate.

Detailed explanation-4: -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.

Detailed explanation-5: -The interest rate is the amount a lender charges a borrower and is a percentage of the principal-the amount loaned. The interest rate on a loan is typically noted on an annual basis known as the annual percentage rate (APR).