Base Rates

• Cost of funds (interest rate provided by the bank on deposits)
• Cost of the Cash Reserve Ratio
• Operating costs
• The minimum rate of returns
• Cost of the Statutory Liquidity Ratio

Base rate of two different banks may differ because of any one or more of these above-mentioned factors, with the difference in interest rates being the most common factor.

While calculating the base rate five factors are majorly considered, these includes the cost of deposit, the bank's administrative costs, the cost of reserve maintained by the Bank with the Central Bank, the opportunity cost of cash retained by the bank, and other fixed assets.

The base rate influences the interest rates that banks charge for loans they offer. 

For example, your loan interest rates often rise and fall in line with the base rate, but this isn't guaranteed. Even though banks' interest rates increase or decrease automatically when the base rate fluctuates every month, the premium rate remains constant. You can visit the  Saral Banking Sewa website to find out latest base rate offered by banks. 

The base rate provides a floor below which banks are not allowed to lend.

While the base rate is set by the central bank, individual banks might add their own spread or margin to determine the final lending rate. As a result, the effective lending rates can vary slightly among different banks.

Yes, the base rate information is usually available to the public. Individuals can inquire about the current base rate at banks or access it through official publications from banks website as well as from SBS (Click here for current base rate). 

The base rate can change monthly.