PLR Full Form, Base Rate and Prime Lending Rate Explained

PLR full form is Prime Lending Rate, the rate a bank charged its best borrowers, introduced by RBI in October 1994. It became the Benchmark PLR (BPLR) in 2003, was replaced by the base rate on 1 July 2010, by MCLR on 1 April 2016, and, for new floating-rate home loans, by external benchmarks such as the repo rate on 1 October 2019.

What PLR, BPLR and base rate mean

• Prime Lending Rate (PLR): the rate a bank charged its most creditworthy ("prime") borrowers. Other borrowers paid PLR plus a margin.
• Benchmark Prime Lending Rate (BPLR): a revised PLR system introduced in 2003, meant to be a transparent reference rate set by each bank's board.
• Base rate: the minimum rate below which a bank cannot lend. It includes all elements of the lending rate that are common to every category of borrower. Your loan rate is base rate plus a spread.

All three are internal benchmarks: each bank computes its own. That is the key difference from today's external benchmarks, which follow the RBI repo rate or a market rate published by FBIL.

Timeline: PLR to BPLR to base rate to MCLR to EBLR

Why each system was replaced

PLR and BPLR: banks lent below the benchmark

RBI's 2010 base rate guidelines say the BPLR system "fell short of its original objective of bringing transparency to lending rates" mainly because banks could lend below BPLR. In a June 2010 speech, RBI Executive Director Deepak Mohanty pointed to "wide dispersion" in actual lending rates "owing to substantial sub-BPLR lending".

Base rate: a floor, but set by each bank's own method

The base rate fixed the transparency problem: no loan could be priced below it, and banks had to review it at least once a quarter. Each bank still chose its own method to compute it. From 1 April 2016 RBI moved new loans to MCLR, which is built from the bank's marginal (latest) cost of funds, CRR cost, operating costs and a tenor premium.

MCLR: still an internal rate

In September 2019 RBI said pass-through of policy rate changes to lending rates under MCLR had been unsatisfactory, and moved new floating-rate retail loans to external benchmarks. For details of how MCLR works, see floating rate of interest.

PLR vs base rate vs MCLR vs EBLR: comparison

What banks publish today

Banks still publish base rate and BPLR because some old loans remain linked to them. The figures below were read from each bank's own page.

SBI's base rate is 1.75 percentage points above its EBLR. Its BPLR is 6.50 points above. A borrower still linked to either is likely paying well above what a new borrower pays. Current offers are on the home loan interest rates page.

Still on a BPLR or base-rate home loan? What it means for you

RBI rules let these loans run. The 2010 guidelines said existing BPLR loans "may run till their maturity". RBI's Interest Rates on Advances Directions, 2025 say loans on base rate, BPLR or MCLR continue until repayment or renewal. Your bank will not move you automatically.

You can move to the external benchmark:

• If you are eligible to prepay your floating-rate loan without prepayment charges, the switch must be free except for reasonable administrative or legal costs.
• Your new rate must equal what the bank charges a new loan of the same category, type, tenor and amount.
• Other borrowers can switch on mutually acceptable terms.
• The switch is not treated as foreclosure of your loan.

Worked example

Take ₹20 lakh outstanding with 10 years (120 EMIs) left. Rates are illustrative: the old loan is priced at 9.90%, and the switched loan at 8.40%.

Check your own figures on the EMI calculator.

Steps to switch

1. Find your benchmark on the sanction letter or loan statement (BPLR, base rate, MCLR or repo).
2. Ask the bank for its current rate for a new home loan of your amount and remaining tenor.
3. Submit a written conversion request at your branch and ask for the charges in writing.
4. If the bank's terms are poor, compare a balance transfer to another lender.

PLR and base rate: common questions

What is the full form of PLR?

Prime Lending Rate. BPLR is Benchmark Prime Lending Rate.

Is the base rate the same as the repo rate?

No. The base rate is each bank's internal minimum lending rate. The repo rate (5.50% now) is the rate at which RBI lends to banks, and it is one of the external benchmarks for new home loans.

Can a bank still give a new home loan on the base rate?

No. New loans moved to MCLR from 1 April 2016, and new floating-rate home loans to external benchmarks from 1 October 2019.

Does the bank charge a fee to move me off base rate?

For borrowers eligible to prepay without charges, RBI allows only reasonable administrative or legal costs.

Sources: RBI Guidelines on the Base Rate, 9 April 2010: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5579 ; RBI Master Circular – Interest Rates on Advances, 1 July 2009: https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=5133 ; RBI speech "Perspectives on Lending Rates in India", Deepak Mohanty, June 2010: https://rbi.org.in/scripts/BS_SpeechesView.aspx?id=508 ; RBI press release on MCLR, 17 December 2015: https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=35749 ; RBI press release on external benchmark lending, 4 September 2019: https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=48070 ; RBI Commercial Banks – Interest Rates on Advances Directions, 2025: https://www.rbi.org.in/scripts/BS_ViewMasDirections.aspx?id=13149 ; SBI base rate history: https://sbi.bank.in/web/interest-rates/interest-rates/base-rate-historical-data ; SBI BPLR history: https://sbi.bank.in/web/interest-rates/interest-rates/benchmark-prime-lending-rate-historical-data ; SBI home loan rates: https://sbi.bank.in/web/interest-rates/interest-rates/loan-schemes-interest-rates/home-loans-interest-rates-current ; PNB rates: https://pnb.bank.in/interst-rate-on-advances-linked-to-mclr.html ; Bank of Baroda rates: https://bankofbaroda.bank.in/interest-rate-and-service-charges/retail-loans-interest-rates