In the light of concerns over fixing lending rates differently for agriculture and corporate borrowers, Reserve Bank of India on Tuesday said the benchmark prime lending rate system may be reviewed and transparent guidelines issued for appropriate pricing of credit.
The Indian Banks' Association will review the current system in consultation with its member banks and issue the guidelines.
The central bank said competition had forced the pricing of significant portions of loans far out of alignment with BPLRs and in a non-transparent manner.
"There is a public perception that there is under-pricing of credit for corporates, while there could be over-pricing of lending to agriculture and SMEs," it said.
RBI said there is a need to review the current procedures and pricing of credit processes through a well-structured and segment-wise analysis at various stages in the whole credit cycle.
