Q. Consider the following statements:
1.The scheduled commercial banks cannot lend the money below Base Rate.
2.The Base Rate came into effect by replacing benchmark prime lending rate.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: C

Explanation: Base Rate is the interest rate below which Scheduled Commercial Banks (SCBs) will lend no loans to its customers—its means it is like prime lending rate (PLR) and the benchmark prime lending Rate (BPLR) of the past and is basically a floor rate of interest.

It replaced the existing idea of BPLR on 1 July, 2010.

Source: TMH Ramesh Singh