this is very good ppt on prime lending rate that bank charge to their customer with good credit history.

1. “PRIME LENDING RATE”
By:- Bachcha Babu Mandal

2. INTRODUCTION :-
The interest rate charged by bank on their largest, most secure and creditworthy
customer on short term loans. This rate is used as a guide for computing interest rates
for other borrowers.
In other words we can say that prime lending rate which bank charge to their customer
with good credit history. Bank are free to set their prime lending rate.

3. Prime lending rate
Base rate
MCLR
(marginal cost
of fund based
lending rate)
October 1997
July
2010 to 31st march
2016
1st April 2016
onwards

4. BASE RATE Vs. MCLR
BASE RATE
 Cost of fund
 Margin
 Operating expenses
 Cash reserve ratio
MCLR
 Marginal cost of funds
 Tenor premium
 Operating expenses
 Cash reserve ratio
Calculation of
lending rate
on loan

5. What happen if PLR increase:-
 Rate of interest will goes up.
 People will borrow less money from bank.
 Rate of inflation will come down.
 The investment in other field will come down.

6. What will happen if PLR decrease:-
 The rate of interest of loan will come down.
 People will start borrowing more money from bank.
 The flow of money in the market will increase.
 Investment in other field will goes up.