How do banks help in the economic development of a country?

• Banks mobilize the small savings of the public and make them available for productive purposes.
• Banks provide convenient means of transfer of funds from one place to another.
• Banks also act as a mediator between exporters and importers by way of letter of credit and bank guarantee.
• Banks give preference to priority sector lending which leads to equitable and productive use of funds.
• Banks provide funds for huge infrastructure projects by way of consortium lending.

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BPLR- Benchmark Prime Lending Rate

BPLR is the interest rate that commercial banks normally charge their most credit-worthy customers.

The BPLR system, introduced in 2003, fell short of its original objective of bringing transparency to lending rates mainly because under the BPLR system, banks could lend below BPLR.

BPLR has now lost its importance and is made applicable normally only on the loans which have been sanctioned before the introduction of Base Rate (i.e. July 2010).

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