Bank Lending Channel: The Role and Effectiveness of Benchmark Interest Rates

D. Anil Raj
Research Scholar, Research and Development Centre
Bharathiar University, Coimbatore, Tamil Nadu, India
Dr. N. Ajithkumar
Professor, Amritha School of Arts & Science, Kerala, India
Volume 6, Issue 1, December 2017, Pages: 63-71
ISSN: 2319-961X, UGC Approved Journal No. 44192, Impact Factor: 3.104


Since the deregulation of Bank interest rates in India, to make the credit pricing more transparent, Banks were asked to declare a reference benchmark rate for lending around which they should normally lend. This article briefs the history of benchmark lending rates of Banks, various methodologies used and its effectiveness in transmitting the monetary policy rate.


benchmark lending rate, monetary policy transmission mechanism, base rate, marginal cost