Prime Lending Rate In banking parlance, the BPLR means the Benchmark Prime Lending Rate.

BPLR is the interest rate that commercial banks normally charge (or we can say they are expected to charge) their most credit-worthy customers. Although as per Reserve Bank of India rules, Banks are free to fix Benchmark Prime Lending Rate (BPLR) for credit limits over Rs.2 lakh with the approval of their respective Boards yet BPLR has to be declared and made uniformly applicable at all the branches. The banks may authorize their Asset-Liability Management Committee (ALCO) to fix interest rates on Deposits and Advances, subject to their reporting to the Board immediately thereafter. The banks have also to declare the maximum spread over BPLR with the approval of the ALCO/Board for all advances. However, with the introduction of Base Rate concept, BPLR is slowly losing its importance and is made applicable normally only on the loans which have been sanctioned before the Base Rate has been made compulsory. Base Rate The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except for DRI advances, loans to bank's own employees and loan to banks' depositors against their own deposits. (i.e. cases allowed by RBI) Difference The Reserve Bank of India (RBI) committee on reviewing the benchmark prime lending rate (BPLR) recommended that the BPLR nomenclature be scrapped and a new benchmark rate known as Base Rate should replace it. Base Rate is much more transparent and banks are not allowed to lend below the base rate (except for cases specified by RBI). Base Rate is to be reviewed by the respective banks at least on quarterly basis and the same is to be disclosed publicly. On the other, the calculations of BPLR was mostly not transparent and banks were frequently lending below the BPLR to their prime borrowers and also under pressure due to various reasons.