Prime Lending Rate

PLR represents the benchmark rate used by banks to price loans for their best customers (with high creditworthiness). Other borrowers are usually charged higher rates depending on risk.

In India, PLR has largely been replaced by modern benchmark systems like Base Rate, MCLR (Marginal Cost of Funds based Lending Rate), and external benchmarks (like repo rate) introduced by the Reserve Bank of India.

Key Features of PLR

• Lowest lending rate offered by banks
• Applies to highly creditworthy borrowers
• Acts as a reference for other loan rates

PLR vs MCLR vs Repo Rate

• PLR: Old benchmark lending rate
• MCLR: Current internal benchmark based on cost of funds
• Repo Rate: Rate at which RBI lends to banks

Why PLR Matters

• Historical benchmark for loan pricing
• Helps understand evolution of lending rates
• Reflects borrower risk assessment

"If a bank’s PLR is 10%, its best customers may get loans at or near this rate, while others may pay higher rates."