The Hindu : Banks urged to review spreads over the PLR

Online edition of India's National Newspaper
Tuesday, Apr 30, 2002

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Banks urged to review spreads over the PLR

By Our Special Correspondent

MUMBAI APRIL 29. The Reserve Bank of India today urged the banks to review the present maximum spreads over their Prime Lending Rate (PLR) and reduce them wherever they are unreasonably high so that credit may be available to borrowers at reasonable interest rates.

''Spreads above PLR of some banks are substantial,'' said Bimal Jalan, Governor, Reserve Bank while announcing the Monetary and Credit Policy for 2002-03, here, today. Further banks should announce the maximum spread over PLR to the public along with the announcement of their PLR. The Reserve Bank announced further measures to develop Government Securities market. It also said that the access to call money market would be regulated.

In view of the representation that some exporters still do not get the advantage of the concessional rate of interest in the case of deemed exports, the Governor urged banks to widely publicise the concessionality in the interest rates for deemed exports and make these available to all eligible exporters. To ease restrictions on banks for deploying FCNR (B) deposits and in order to avoid asset-liability mismatches, banks are permitted to invest their FCNR (B) deposits in longer term fixed income instruments with appropriate rating prescribed for the money market instruments.

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