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Name : S.V.S.Ramani
Subject: Prime Rate
Reply : Prime rate and PLR are same. It is the rate at which a Bank lends to its best customers. Ideally interest rate are linked to the risk rating of the customer. Prime rate is given when there is little or no risk of default. Rate over and above the prime rate is decided on the basis of risk rating. The greater the perception of risk, the greater will be the rate of interest over the prime rate. This differential between the actual rate and the prime rate, is called the risk premium. As a matter of policy all borrowers cannot be given PLR as credit risk rating will be different for different customers.


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