What changed
RBI partially modified paragraph 2(iii) of its April 9, 2010 circular on Base Rate guidelines. Banks are now permitted to change the benchmark and methodology used in Base Rate computation for an additional six months, until June 30, 2011.
What it means for you
This extension gives banks more breathing room to transition to a new Base Rate benchmark or methodology without immediate compliance pressure. Lenders can continue using existing approaches while preparing for any future changes, reducing operational disruption.
What you must do
- Review your current Base Rate benchmark and methodology to assess if a change is needed by June 30, 2011.
- Plan internal timelines for any benchmark or methodology transition to meet the extended deadline.
- Communicate with your treasury and risk teams to align on the revised timeline.
- Monitor RBI circulars for any further guidance on Base Rate computation.
Who it affects
All scheduled commercial banks (excluding RRBs), Bank treasury and ALM teams, Retail and corporate lending divisions
What is the new deadline for changing the Base Rate benchmark?
The deadline is extended to June 30, 2011, giving banks an additional six months from the earlier timeline.
Does this circular apply to Regional Rural Banks?
No, the circular explicitly excludes RRBs and applies only to all scheduled commercial banks.