PROPERTY POWER REFERENCE RATE(PPRR) & BASE RATE & OTHERS

POSTED BY Suresh Agarwal ON November 6, 2012 7:01 pm COMMENTS (2)

Dear Manish

I have taken a loan of Rs 49,40,000 against property @12% PA.for 10 years from City Bank.

PPRR:14%

Rate:12%

Annual fee:Nil

EMI:71,184 for 119 months starts from 1st Dec 2012.Last EMI on 1st Oct 2022.

Rs.3295 charged on 1st Nov 2012.

Prepayment up to 25% of loan every year.

I want to know the diff between PPRR (14%) and Base Rate(9.75%) shown by City Bank.

Are PPRR & Base Rate changes (Varies) at same proportionate?

Is PPRR suitable?

 

2 replies on this article “PROPERTY POWER REFERENCE RATE(PPRR) & BASE RATE & OTHERS”

  1. Dear Suresh, PPRR is linked with PLR & not so transparent where as Base rate is very transparent. So take your pick.

    thanks

    Ashal

  2. Biswa Singh says:

    These rates are applicable for floating point interest.

    Base Rate
    =========
    This is the rate below which a bank can not offer a loan as stipulated by RBI.

    I think this rate is determined for every bank considering the following factors: bank’s cost of deposits, operating costs, Cash Reserve Ratio and the profit margin.

    The base rate help borrowers to compare interest rates offered by various banks and make the process of how banks arrive at interest rates for loans more transparent.

    Reference Rate
    =============
    This the rate at which bank offer the loan. This is little bit more than the base rate i.e. if the base rate is 10% then then a bank can choose 10.5% or 11%, etc as reference rate.
    The difference between the reference rate and base rate is called SPREAD value in financial jargon.

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