RATIONALIZATION OF RATE OF INTEREST ON DEPOSIT AND LENDING. REF: BRPD CIRCULAR LETTER NO. 01 DATED 22.01.2012.

Cap on rate of interest on lending in all sectors other than pre-shipment export credit and agricultural loans has recently been withdrawn vide BRPD Circular No.-02 dated January 04, 2012. Complaints from business community are being made that banks are not exercising their freedom while fixing rate of interest on lending in justified and rational manner. In this regard banks are advised to limit the difference between lending rate and weighted average rate of interest on deposit or intermediation spread within lower single digit in different sectors other than high risk consumer credit (including credit card) and SME loans.

This instruction shall come into force with immediate effect.

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