Base Rate

byPaytm Editorial TeamLast Updated: August 19, 2025

Definition

The Base Rate is the minimum interest rate set by the Reserve Bank of India (RBI) that banks must charge on loans.

Purpose

Introduced in 2010, the base rate ensures transparency and prevents banks from charging very high or arbitrary rates.

Benefits

  • Fair loan pricing
  • Protects borrowers
  • Brings uniformity in lending practices

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