The interest below which a bank is not expected to lend its customers is known as

The correct answer is base rate

Key Points

• The Base Rate is the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. It is the minimum interest rate of a bank below which it is not viable to lend.

Additional Information Prime Lending Rate:

• It is the interest rate that commercial banks normally charge (or we can say they were expected to charge) their most credit-worthy customers.
• The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except in cases allowed by RBI. The base rate system has replaced the BPLR system with effect from July 1, 2010.

Deposit rate

• The deposit interest rate is the percentage of profit you earn on your money in an interest-bearing account with a financial institution.
• The interest rate offered by banks and other financial institutions on deposits can vary depending on the type of deposit account, the amount of deposit, and the tenure of the deposit

Bank rate

• The bank rate is the rate of interest at which a central bank lends money to commercial banks, usually in the form of long-term loans.
• The Reserve Bank of India (RBI) is the central bank of India and determines the bank rate in India.
• The bank rate is used by the central bank to control the money supply in the economy and influence economic activity.
• The bank rate is usually higher than the repo rate on account of its ability to regulate liquidity