Evolution of RBI's Lending Rate Benchmarks

 From Prime Lending Rate to External Benchmark System (1994-2019)

[ First published in (2025-2)217 PLR 001 (Journal Section), circulated with permission of the Punjab Law Reporter ]

Authored by

Er. Sandeep Suri, Advocate, BE (Electronics).  LLB. College of Law of England and Wales, York (International Business).  Chevening Scholar (London)

Rohit Suri, Advocate , B.Com. LLB.

Subros & Associates

 Abstract

This article provides a comprehensive chronological analysis of the Reserve Bank of India's progressive reforms to banking interest rate frameworks over the past three decades. Beginning with the deregulation-driven Prime Lending Rate system in 1994, the study traces the evolution through five distinct regimes: PLR (1994-2003), Benchmark Prime Lending Rate (2003-2010), Base Rate (2010-2016), Marginal Cost of Funds-based Lending Rate (2016-2019), and the current External Benchmark-based Lending Rate system (2019-present).

Each regime transition was motivated by specific policy objectives—initially to introduce market competition and operational autonomy for banks, subsequently to enhance transparency in credit pricing, and ultimately to improve monetary policy transmission to borrowers. The analysis examines the implementation mechanisms, legal frameworks established through RBI circulars, policy rationale, and practical shortcomings of each system.

There has been a persistent challenge in achieving effective monetary policy transmission, with each successive framework attempting to address the opacity and rigidity that characterized its predecessor. While the PLR and BPLR systems suffered from lack of transparency and widespread sub-benchmark lending, the Base Rate and MCLR regimes, despite improvements, failed to deliver swift and complete transmission of policy rate changes to borrowers. The current EBLR framework represents RBI's most decisive intervention, mandating external benchmarks for retail and MSME loans to eliminate banks' discretion in reference rate determination.

Keywords: Reserve Bank of India, lending rates, monetary policy transmission, banking regulation, interest rate benchmarks, PLR, BPLR, Base Rate, MCLR, EBLR

Evolution of RBI's Lending Rate Benchmarks

 From Prime Lending Rate to External Benchmark System (1994-2019)

1994 - Prime Lending Rate (PLR) System

Implementation Period: The PLR system emerged from RBI’s deregulation of lending rates in the mid-1990s. By RBI Circular DBOD.No.Dir.BC.115/13.07.01/94 dated October 17, 1994 (effective October 18, 1994), banks were permitted to set their own lending rates for credit limits above ₹2 lakh. Each bank, with approval of its Board, determined a Prime Lending Rate (PLR) – the minimum interest rate for all loans above ₹200,000. Loans up to ₹2 lakh remained regulated to protect small borrowers: initially such small loans had administered rates, and from April 29, 1998 onward RBI directed that interest on loans ≤₹2 lakh “shall not exceed the PLR” of the bank. In effect, the PLR was the rate offered to the bank’s most creditworthy borrowers (prime customers), and served as a floor rate for larger loans and a ceiling rate for small loans.

RBI Circulars and References: Key RBI directives during the PLR era included the 1994 deregulation circular noted above, and subsequent guidelines refining the regime. For instance, an RBI notification in April 1998 implemented the cap tying small loan rates to PLR. The PLR system’s rules were later consolidated in RBI’s Master Circulars on Interest Rates on Advances. Notably, RBI’s Master Circular acknowledges that interest rates on advances were “progressively deregulated… with effect from October 18, 1994”, which marked the beginning of the PLR-based pricing autonomy for banks. Under this framework, banks had to declare a single PLR applicable across all branches and were required to report their maximum and minimum lending rates alongside the PLR to ensure transparency.

Policy Intent: The PLR regime was part of granting greater functional autonomy to banks in the 1990s. By deregulating rates for large loans, RBI aimed to introduce competition and efficiency in credit pricing while still shielding small borrowers from usurious rates. The PLR was intended to be a benchmark reflecting a bank’s cost of funds for its best customers. RBI’s policy intent was that the PLR serve as an anchor rate – any riskier loans would be priced at a premium above PLR, but small retail loans would not be charged more than PLR, thereby ensuring concessionality for vulnerable borrowers. In official language, RBI described the PLR as “the minimum rate charged” by a bank for the relevant category of loans.

Over time, the PLR system was found to have transparency issues. Because each bank set its own PLR, comparing lending rates across banks was difficult for customers. Further, there were reports that some creditworthy corporate borrowers managed to secure loans below the declared PLR, through special discounts or by routing loans through categories not formally subject to the PLR floor. By the early 2000s, RBI observed that the PLR often did not truly reflect banks’ actual cost of funds, undermining its role as a benchmark. There was a concern that the PLR regime enabled non-transparent lending practices, where ordinary borrowers might be charged higher spreads while favored clients enjoyed sub-PLR rates. These concerns set the stage for a revised framework to improve transparency.

2003  - Benchmark Prime Lending Rate (BPLR) System

Implementation Period: In 2003, the RBI replaced the PLR regime with the Benchmark Prime Lending Rate (BPLR) system. As per RBI guidelines issued that year, the prescription of a minimum lending rate for loans above ₹2 lakh was abolished and banks were given freedom to price loans above ₹2 lakh subject to a board-approved BPLR and spread rules. Banks implemented BPLR from 2003 onward, and this system remained in effect for all loans sanctioned up to June 30, 2010 (after which it was superseded by the Base Rate for new loans). Thus, roughly 2003–2010 marks the BPLR era for new credit. (Loans sanctioned prior to July 2010 under BPLR could run to maturity on that basis.)

RBI Circulars and References: The introduction of BPLR was communicated through RBI circulars in mid-2003. For example, RBI Circular DBOD.No.Dir.BC. 103/13.07.01/2003 (dated April 30, 2003) and subsequent circulars in October 2003 provided the operational guidelines for the BPLR system, including the treatment of spreads. As per the Master Circular, each bank’s BPLR had to be publicly declared and made uniformly applicable across all branches. The BPLR continued to serve as the ceiling rate for small loans up to ₹2 lakh, meaning banks could not charge small borrowers above the BPLR (thereby carrying forward the protective cap for weaker sections). However, importantly, RBI permitted banks to lend below the BPLR to certain creditworthy borrowers (such as exporters and top-rated corporates) based on a transparent policy approved by the bank’s Board. Banks also had to declare the maximum spread over BPLR that they would charge, to curb excessive interest rate differentiation.

Rationale : The shift to BPLR was motivated by a need to enhance transparency in loan pricing and to ensure the benchmark rate better reflected actual funding costs. RBI explicitly stated that this change was to make the pricing of loan products more transparent and to align lending rates with banks’ cost of funds. The terminology “Benchmark PLR” signified that this rate was to serve as the primary reference point for lending rates. In legal parlance, BPLR was defined as “the reference rate for credit limits of over Rs. 2 lakh” for each bank. Banks were expected to compute the BPLR taking into account components such as the actual cost of funds, operating expenses, and a minimum margin for provisioning/capital and profit. This was intended to ground the BPLR in economic reality. The spread over BPLR for a given loan would then account for borrower-specific risk or other factors.

Issues : The BPLR system, despite RBI’s intentions, attracted significant criticism for failing to meet its objectives. In practice, many banks took advantage of the flexibility to lend below the BPLR. RBI later noted that the BPLR regime “fell short of its original objective of bringing transparency to lending rates”, mainly because banks could lend below their own BPLR. Large corporate clients often negotiated loans at interest rates well below the BPLR, while smaller borrowers were typically charged BPLR or higher. This sub-BPLR lending made it difficult to discern banks’ true lending rate structure and hampered monetary policy transmission (i.e., cuts in RBI’s policy rates were not reflected proportionately in the rates borrowers paid). Essentially, the BPLR had become a notional reference – many loans were priced without real reference to it – and the system was seen as opaque and unfair to certain borrowers (since retail and small business customers effectively subsidized the rates given to elite borrowers). These shortcomings prompted RBI to convene a Working Group (Chairman: Shri Deepak Mohanty) in 2009 to review the BPLR system, ultimately leading to the introduction of the Base Rate system.

 Implementation : The Base Rate regime took effect from July 1, 2010 for all new domestic currency loans. RBI issued Circular RBI/2009-10/390, DBOD.No.Dir.BC.88/13.03.00/2009-10 dated April 9, 2010 titled “Guidelines on the Base Rate,” which mandated that the Base Rate would replace the BPLR as the benchmark for lending from July 1, 2010. All new loans (and renewals of existing loans) on or after that date had to be priced with reference to the Base Rate. Existing loans under the BPLR system were allowed to continue until maturity, but borrowers were given the option to switch to Base Rate without any charges. The Base Rate system remained the principal regime from 2010 until 2016, when it was supplanted (for new loans) by MCLR. Notably, some older loans continued on Base Rate even beyond 2016 until they were repaid or migrated, as Base Rate co-existed for legacy accounts.

RBI Circulars and References: RBI’s April 2010 circular (No. 88) is the foundational document for the Base Rate framework. It was issued in the backdrop of the Annual Policy Statement 2009-10 and the recommendations of the Mohanty Working Group which had examined BPLR anomalies. The circular unequivocally stated: “The Base Rate system will replace the BPLR system with effect from July 1, 2010.”. Banks were instructed that no lending could occur below the Base Rate, as the Base Rate represented the minimum rate for all loans. A few specific categories were exempted from Base Rate benchmarking – notably, loans against a bank’s own deposits, loans to bank employees, and loans under the DRI (Differential Rate of Interest) scheme for disadvantaged borrowers could be priced without reference to Base Rate. Aside from these exceptions, the Base Rate became the floor rate for all lending. RBI required banks to compute their Base Rate taking into account the cost of funds, adjusted for unallocable costs and profit margin, and to disclose their methodologies. Each bank was allowed only one Base Rate (one figure) at a time, which had to be published and displayed publicly. Banks also had to review their Base Rate at least quarterly and report lending rate data to RBI, reinforcing the transparency objective.

Rationale : The Base Rate system was explicitly aimed at correcting the deficiencies of the BPLR regime. In its circular, RBI noted that BPLR (introduced in 2003) “fell short of its original objective… mainly because under the BPLR system, banks could lend below BPLR”, which made it difficult to assess monetary policy transmission. The Base Rate was conceived to enhance transparency in lending rates and improve the assessment of monetary policy transmission. In other words, RBI wanted a benchmark that would move in tandem with changes in policy rates and funding costs, and below which banks would not extend credit. The legal terminology in RBI’s directive emphasized that Base Rate “shall include all those elements of the lending rates that are common across all categories of borrowers” – effectively bundling the cost of funds, reserve requirements, and bank overheads into one base figure. Any loan-specific or borrower-specific factors (credit risk, tenor premium, etc.) would then be added as a spread above the Base Rate. The policy intent was to eliminate the pervasive practice of sub-BPLR lending and thereby ensure that when RBI adjusted key rates (like the repo rate), banks’ Base Rates would adjust and all borrowers would eventually benefit from (or bear the burden of) such changes. Additionally, by removing the earlier ceiling on small loan rates (the stipulation that loans ≤₹2 lakh not exceed BPLR was withdrawn), RBI expected that credit flow to small borrowers would increase at reasonable rates, with direct bank finance competing down the high lending rates charged in the informal sector.

Issues : The Base Rate regime was an improvement in transparency, but over time it too encountered criticisms regarding sluggish monetary transmission. One issue was that banks had discretion in how they calculated the Base Rate – for example, RBI allowed banks to use either an average cost of funds or marginal cost of funds approach, among other methodologies, in computing the Base Rate. Many banks adopted an average cost formula, which made the Base Rate less sensitive to current policy rate changes (since it blended in past deposit costs). Consequently, when RBI cut policy rates, banks often did not reduce Base Rates quickly or adequately, leading to complaints by regulators and borrowers. By 2015, then RBI Governor Dr. Raghuram Rajan publicly noted frustration that “the benefits of policy rate cuts were not being passed on to borrowers” under the Base Rate system. Another criticism was that even though Base Rate was supposed to be the floor, some banks found ways to charge effective rates below Base Rate by offering waivers on fees or using cross-subsidization. In regulatory reviews, RBI observed significant rigidity in Base Rates despite changes in policy rates, undermining the very goal of improved transmission. These issues led RBI to consider yet another refinement of the lending benchmark – one based more directly on marginal funding costs – culminating in the MCLR guidelines of 2016.

2016  - Marginal Cost of Funds-based Lending Rate (MCLR) Regime

The MCLR regime came into effect from April 1, 2016. This framework was instituted by RBI Circular RBI/2015-16/273, DBR.No.Dir.BC.67/13.03.00/2015-16 dated December 17, 2015, which set out final guidelines on the computation of lending rates based on marginal cost of funds. All new rupee loans sanctioned (and credit limits renewed) on or after April 1, 2016 had to be priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR), which became the banks’ internal benchmark for lending. The Base Rate system was thus phased out for fresh lending from that date, although existing Base Rate loans could continue until repaid or shifted to MCLR. The MCLR system remains in force (with some scope curtailed by the introduction of external benchmarks in 2019 – see next section) and co-exists with Base Rate for older loans. Banks typically publish multiple MCLR rates for different maturities, updating them regularly (often monthly).

RBI Circulars : The move to MCLR was telegraphed by RBI in early 2015 and finalized by late 2015. In the First Bi-monthly Monetary Policy Statement for 2015-16 (April 7, 2015), RBI noted the need to “improve the efficiency of monetary policy transmission” and indicated it would encourage a shift to marginal-cost-of-funds-based lending rate determination. Draft guidelines were issued on September 1, 2015, and after public feedback, Circular DBR.No.Dir.BC.67/13.03.00/2015-16 dated 17.12.2015 was promulgated. This circular (addressed to all commercial banks) laid out the rules of MCLR. It specified that from April 1, 2016, every bank must calculate and declare an array of MCLR rates (for overnight, one-month, three-month, six-month, one-year maturities at a minimum). The MCLR for each tenor would be a summation of four key components: (i) Marginal cost of funds, (ii) Negative carry on account of CRR (unremunerated cash reserve costs), (iii) Operating costs, and (iv) a Tenor premium for longer-term loans. The RBI circular provided an explicit formula and methodology for each component – for instance, the marginal cost of funds included the latest costs of deposits and borrowings (plus return on net worth). Banks were required to publish these rates and update them at least once a month. Additionally, banks had to have a board-approved policy for the spreads over MCLR, delineating how borrower-specific factors like credit risk are translated into a spread. Crucially, the regulations stipulated that once a loan’s interest rate is linked to a particular MCLR (say 1-year MCLR), the rate could be reset on a pre-specified interval (typically one year for retail loans, though shorter resets could be used) – this ensured that a borrower’s rate would adjust periodically in line with changes in the benchmark MCLR.

Rationale : The introduction of MCLR was driven by RBI’s assessment that the Base Rate regime had not yielded satisfactory monetary transmission. By using marginal cost of funds, the RBI intended that banks’ benchmark rates would more swiftly reflect current interest rates on incremental funds (e.g. recent deposits or market borrowings) rather than being bogged down by historical averages. As RBI noted, this was to “improve the efficiency of monetary policy transmission” to lending rates. In more direct terms, RBI wanted that when it reduces the policy repo rate, banks’ funding costs (and hence MCLRs) should decrease in step, and borrowers should quickly feel the benefit through lower loan rates. The legal/official language described MCLR as an “internal benchmark” that is tenor-linked – meaning different loan tenors have different reference rates. This was a significant change: previously, under Base Rate, banks had a single benchmark rate for all loans regardless of tenure. Under MCLR, a 6-month loan could be priced off the 6-month MCLR, a 1-year loan off the 1-year MCLR, etc., acknowledging that the cost of funds varies with the duration of lending. RBI’s policy intent was also to bring in uniformity and discipline in how banks price loans: the MCLR components were clearly defined by regulation, leaving less room for arbitrary methods. Furthermore, RBI required banks to keep the spread component stable barring material changes in borrower credit risk, preventing banks from stealthily widening spreads to negate benchmark reductions.

Issues : While MCLR did make some improvements, within a couple of years it became evident that transmission was still incomplete. One issue was the reset frequency of loans: many loans were on an annual reset, meaning even if the MCLR fell, a borrower’s rate wouldn’t change until the next reset date (up to one year away). This lag diluted the immediate impact of policy rate cuts. Additionally, banks sometimes adjusted spreads or switched customers to longer-reset MCLR products to delay passing on rate reductions. An RBI Internal Study Group (2017) reviewed the MCLR system and observed that banks had considerable discretion in calculating the marginal cost and in determining spreads, leading to outcomes not fully aligned with RBI’s intent. The study found that internal benchmarks like Base Rate and MCLR “have not delivered effective transmission… primarily due to the arbitrariness in calculation of the benchmarks and spreads”. From a borrower’s perspective, MCLR rates did come down more than Base Rates had, but banks were still slow and uneven in transmitting RBI’s rate cuts (for example, in early 2019, despite substantial repo rate cuts, the reduction in banks’ lending rates was only a fraction of the policy easing). Critics also pointed out that because deposit rates (especially on savings accounts) remained not fully market-linked and often rigid, banks faced a mismatch – cutting lending rates quickly under MCLR could hurt banks’ margins if their deposit costs were sluggish to adjust. Thus, even MCLR was seen as inadequate in forcing prompt, uniform lending rate adjustments. These persistent issues led RBI to explore external benchmarking, culminating in the EBLR framework in 2019.

2019 - External Benchmark Lending Rate (EBLR) Regime

Implementation Period: The External Benchmark-based Lending Rate (EBLR) regime was introduced in late 2019 as the latest step to strengthen monetary policy transmission. RBI issued Circular RBI/2019-20/53, DBR.DIR.BC.No.14/13.03.00/2019-20 dated September 04, 2019, which directed banks to link all new floating rate loans in select categories to an external benchmark with effect from October 1, 2019. Initially, this mandate applied to all new floating-rate personal/retail loans (such as housing and auto loans) and all new floating-rate loans to Micro and Small Enterprises (MSE). In a subsequent circular in 2020 (RBI/2019-20/167, DOR.DIR.BC.No.39/13.03.00/2019-20 dated February 26, 2020), RBI extended the external benchmark requirement to floating-rate loans to Medium Enterprises as well, for loans from April 1, 2020 onwards. Thus, as of April 2020, all new floating-rate loans to the entire MSME sector and retail segment are tied to external benchmarks. (Large corporate borrowers’ loans were not mandated under EBLR, though banks have the discretion to offer externally benchmarked rates to other segments as well.) The EBLR system operates in parallel with the older MCLR/Base Rate systems for legacy loans; existing borrowers have the option to switch to an external benchmark at mutually agreed terms, without any charges for the switch as per RBI guidelines.

RBI Circulars : The key circular of September 2019 (DBR.DIR.BC.No.14/13.03.00/2019-20) lays down the framework of external benchmarking. RBI referenced an Internal Study Group (ISG) report of October 2017 which had recommended a time-bound switch to external benchmarks after finding that internal benchmarks (Base Rate, MCLR) had not delivered effective transmission. In its Fifth Bi-monthly Monetary Policy Statement for 2018-19, RBI had initially announced that from April 1, 2019 such loans would be externally benchmarked, but after further consultations (as noted in the April 2019 policy statement) the implementation was shifted to October 2019. The circular then amended the Master Direction on Interest Rate on Advances (2016) to incorporate the new rules. Under the EBLR guidelines, banks must benchmark new floating rate loans in the specified categories to one of a few approved external benchmarks: (a) the RBI’s policy Repo Rate, (b) the 3-month Government of India Treasury Bill yield published by FBIL, (c) the 6-month Treasury Bill yield by FBIL, or (d) any other benchmark market interest rate published by FBIL. Each bank is free to choose its preferred benchmark from this list, but must adopt a uniform benchmark for each loan category (i.e., a bank cannot use the repo rate for some home loans and a T-Bill rate for other home loans – it must be consistent within that product line). The circular also stipulates how banks can set the spread over the external benchmark: banks have freedom to decide the spread at loan origination, but the credit risk premium component of spread can change subsequently only if the borrower’s creditworthiness undergoes a substantial change, and other components of spread (such as operating cost) can be altered only once in three years. Furthermore, the interest rate must be reset at least once every three months under these external benchmark-linked loans, so that borrowers’ rates track the benchmark promptly. These provisions were crafted to ensure transparency and fairness – preventing banks from arbitrarily gaming the spread or delaying rate resets. The February 2020 circular extending coverage to medium enterprises reiterated the same rules for that segment and noted that the Master Direction (Interest Rate on Advances, 2016) was updated accordingly.

Rationale : The EBLR regime represents RBI’s most decisive effort to force quicker and fuller transmission of policy rate changes to borrowers. By mandating an external benchmark (such as the repo rate), RBI essentially removed banks’ discretion in setting the reference rate – the benchmark is now a market-determined or policy-determined rate outside the bank’s control. RBI’s rationale, as documented in the 2019 circular, was that despite earlier reforms, the benefits of changes in the RBI’s policy repo rate were not adequately passed on to borrowers by banks. Empirical evidence cited by RBI showed that in early 2019, although the RBI cut the repo rate by 75 basis points, the weighted average lending rate on fresh loans fell by only 29 bps. This underscored an inadequacy in interest rate transmission under the MCLR system. The official intent of external benchmarking is to make lending rates objective, transparent, and closely aligned to monetary policy. In legal terms, RBI’s circular expressed that internal benchmarks had not delivered effective transmission and that the switch to an external benchmark was recommended “in a time-bound manner” by the internal study group. By linking loans to, say, the RBI repo rate, any repo rate cut or hike is supposed to be immediately reflected in the borrower’s rate (subject to the quarterly reset). RBI also intended to enhance standardization – hence the rule that a bank cannot use multiple benchmarks for the same type of loan, ensuring all borrowers of a certain product are treated uniformly. The EBLR framework aims to strengthen borrower confidence that they will receive the full benefit of policy rate reductions. It’s effectively a shift to a transparent, market-linked pricing regime, minimizing banks’ ability to delay or obscure rate changes.

Issues and Criticisms: The move to external benchmarks was generally welcomed for improving transparency, but it has not been without concerns. One noted issue is that by linking lending rates to external indicators like the repo rate, banks are exposed to interest rate volatility more directly. Borrowers’ Equated Monthly Installments (EMIs) can change more frequently (every 3 months) with changes in the benchmark, which could strain household budgets when rates rise. From banks’ perspective, a major concern is asset-liability management: since deposit interest rates (banks’ liabilities) were not simultaneously mandated to external benchmarks, banks could face margin pressures if, for example, the repo rate falls quickly (forcing loan rates down) while deposit rates remain relatively rigid due to competition or other factors. In fact, the RBI’s own Internal Study Group had acknowledged that issues like the rigidity of deposit rates and the prevalence of long-term fixed rate deposits in banks’ funding could impede transmission; by linking only the asset side (loans) to external benchmarks, banks’ interest rate risk could increase. Critics (including research institutions like Dvara Research) pointed out that unless banks also innovate on the liabilities side (e.g. floating rate deposits), the EBLR could lead to banks being squeezed or becoming hesitant to cut rates in practice. Despite these concerns, initial data post-EBLR indicated an improvement in transmission: RBI noted that sectors where loans were linked to external benchmarks saw faster reductions in lending rates in line with repo rate cuts. Another practical issue has been the coexistence of old and new regimes – borrowers with older MCLR/Base Rate loans have had to decide whether to switch to the new EBLR (banks cannot force them to switch). RBI has advised banks to facilitate such switching without onerous fees, but not all legacy borrowers have migrated, which means two borrowers of similar profile might have loans on different benchmarks causing some confusion or perception of inequity. Legal disputes could also arise in the transition, for example if a borrower claims the bank did not pass on benefits as per the new system – however, RBI’s circulars are quite clear in stipulating the non-discrimination and transparency requirements in rate adjustments. Overall, while EBLR is seen as a corrective step to achieve what previous systems struggled with, its success would be monitored, and further fine-tuning (such as eventually extending it to large corporate loans or linking deposits) could be considered by RBI in the future.

Conclusion

RBI’s regulatory regimes for lending rates have evolved in response to the dynamic interplay of ensuring fair borrower treatment and achieving effective monetary policy transmission. The PLR and BPLR systems introduced fundamental deregulation but suffered from transparency and fairness issues in practice. The Base Rate reform of 2010 was a sharp regulatory response to restore clarity and transmission, using a single minimum rate and prohibiting sub-floor lending – yet banks’ internal cost averaging dampened its impact. The MCLR regime of 2016 refined this by mandating marginal-cost sensitivity and tenor-specific benchmarks, improving alignment with funding costs but still leaving room for delay and discretion. Finally, the EBLR regime from 2019 has anchored retail/MSME loan rates to external public benchmarks, dramatically improving transparency and the speed of rate pass-through, albeit introducing new challenges in risk management. Each transition was backed by detailed RBI circulars and often preceded by expert committee recommendations, reflecting the RBI’s adaptive approach. In any legal dispute over lending rates, the applicable regime at the material time must be examined against these RBI directives. The circulars (cited above) serve as authoritative evidence of the rules in force, the banks’ obligations, and the RBI’s intended outcomes. In summary, the RBI’s successive frameworks – from PLR to BPLR, Base Rate, MCLR, and EBLR – chart a trajectory of policy efforts to ensure that lending rates are set in a transparent, fair, and economically appropriate manner, consistent with broader monetary policy goals.

RBI Master Directions and Circulars

PLR Regime:

1.RBI Circular: DBOD.No.Dir.BC.115/13.07.01/94 dated October 17, 1994

2.Master Directions - Reserve Bank of India

BPLR Regime:

1.RBI Circular: DBOD.No.Dir.BC.103/13.07.01/2003 dated April 30, 2003

Base Rate Regime:

1.RBI Circular: DBOD.No.Dir.BC.88/13.03.00/2009-10 dated April 9, 2010

MCLR Regime:

1.RBI Circular: DBR.No.Dir.BC.67/13.03.00/2015-16 dated December 17, 2015

2.Master Circulars - Reserve Bank of India

EBLR Regime:

1..RBI Circular: DBR.DIR.BC.No.14/13.03.00/2019-20 dated September 4, 2019

2.RBI Circular: DOR.DIR.BC.No.39/13.03.00/2019-20 dated February 26, 2020