Full Form of PLR

What is PLR?

Prime Lending Rate (PLR) is the benchmark interest rate that commercial banks in India charge their most creditworthy borrowers, typically large corporations or high-net-worth individuals. It serves as a reference rate for pricing various loans, including home loans, personal loans, and working capital facilities. The Reserve Bank of India (RBI) does not set PLR directly; instead, each bank determines its own PLR based on factors such as the cost of funds, operating expenses, and profit margins. Historically, PLR was the primary benchmark for floating-rate loans in India, but since 2016, the RBI introduced the Marginal Cost of Funds based Lending Rate (MCLR) and later the external benchmarking system linked to the repo rate to improve transmission of monetary policy. However, PLR remains relevant for legacy loans and certain fixed-rate products. In the Indian banking context, PLR is frequently discussed in regulatory circulars, loan agreements, and financial news. For competitive exams like the RBI Grade B, SEBI, and banking sector exams, candidates are often tested on the evolution of lending rate benchmarks, including PLR, MCLR, and repo rate-linked loans. Understanding PLR helps students grasp how banks price risk and how monetary policy affects borrowing costs in the economy.

PLR का फुल फॉर्म

Example

The State Bank of India reduced its PLR by 25 basis points to 12.25% effective next month, bringing relief to existing home loan customers.

PLR — frequently asked questions

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