The minimum rate set by the Reserve Bank of India (RBI), below which banks cannot lend to its customers, is known as base rate. To make sure that there is transparency in the credit market, the base rate is computed by the RBI. You can read about The Reserve Bank of India: Functions and Composition in the given link.
Further readings:
- Non Performing Assets (NPA) – Facts for UPSC GS-III
- Monetary Policy – Objectives, Roles and Instruments
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