This is the rate at which banks lend money to their prime customers. This rate is often lower than the rate at which banks lend money to their other customers.
Most PLR customers are top blue-chip companies that have excellent credit records (have never defaulted on their interest payments to the banks from which they borrowed money).
If the RBI increases the bank rate, banks will go ahead and increase their PLRs.
How this affects us: This, in turn, will increase your home loan rates as they are linked to (benchmarked to) PLRs. Home loan rates are always priced below a bank’s PLR as they fall under the priority sector category.
Personal loans and vehicle loans, on the other hand, are always priced above a bank’s PLR.