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Master Circular on Interest Rates on Advances (2011)

No longer current — replaced by Master Circular on Interest Rates on Advances – July 2012
Source: Reserve Bank of India · RBI/2011-12/53 · issued 01 Jul 2011 · ~1 min read
Quick answerRBI consolidated all guidelines on interest rates for advances into a single Master Circular as of July 1, 2011, covering base rate, floating rates, penal rates, and more. This replaces the 2010 circular and applies to all scheduled commercial banks except RRBs.

What changed

This Master Circular updates the previous July 1, 2010 circular by incorporating all instructions issued up to June 30, 2011. It consolidates directives on interest rates on advances into one document, including sections on base rate, floating rate loans, penal interest, and consortium lending.

What it means for you

Banks must ensure their lending rate policies align with the updated circular, particularly the base rate framework and guidelines on floating rates. The circular reinforces that interest rates should be transparent and not excessive, and it provides a single reference for compliance.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

All scheduled commercial banks (excluding RRBs), Lending operations teams, Risk and compliance departments, Loan product managers

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Does this circular change the base rate calculation method?

No, the circular consolidates existing guidelines; the illustrative methodology for base rate computation remains as per Annex 2 of the circular.

Are regional rural banks covered by this circular?

No, the circular explicitly excludes Regional Rural Banks (RRBs) from its application.

What is the key takeaway for banks regarding floating rate loans?

Banks must follow the guidelines in para 2.4, which require transparency in how floating rates are reset and linked to the base rate or other benchmarks.

📜 This document’s life story (2 recorded events, each backed by RBI’s own words)
Superseded by Master Circular on Interest Rates on Advances – July 2012
RBI’s words: “Please refer to the Master Circular DBOD.No.Dir.BC.5/13.03.00/2011-12 dated July 1, 2011 consolidating instructions”
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1468: DBOD.No.Dir.BC.5/13.03.00/2011-12 — "Master Circular - Interest Rates on Advances" dated July 1, 2011”
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/53 DBOD.No.Dir.BC. 5 /13.03.00/2011-12    July 1, 2011 Ashadha  10,1933 (Saka) All Scheduled Commercial Banks (excluding RRBs) Dear Sir / Madam Master Circular - Interest Rates on Advances Please refer to the Master Circular DBOD.No.Dir.BC.9/13.03.00/2010-11 dated July 1, 2010 consolidating instructions/ guidelines issued to banks till June 30, 2010 on matters relating to Interest Rates on Advances. The Master Circular has been suitably updated by incorporating instructions issued up to June 30, 2011 and has also been placed on the RBI website ( http://www.rbi.org.in ). A copy of the Master Circular is enclosed. Yours faithfully (P.R.Ravi Mohan) Chief General Manager Encl: as above CONTENTS Para No.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/53 · issued 01 Jul 2011. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6511&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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