The correct answer is: A. 1st April, 2011
The Reserve Bank of India (RBI) allowed banks to fix their base rates on 1st April, 2011. This was a major shift from the earlier system, where the RBI had fixed the base rates for all banks. The move was aimed at making the banking system more competitive and efficient.
The base rate is the minimum interest rate that banks charge on loans. It is calculated based on the bank’s cost of funds, which includes the cost
of deposits, borrowings, and other expenses. The base rate is used as a benchmark for other interest rates, such as the prime lending rate and the benchmark rate.The move to allow banks to fix their own base rates was welcomed by the banking industry. It was seen as a way to improve competition and efficiency in the sector. However, some critics argued that the move could lead to higher interest rates for borrowers.
The RBI has said that it will continue to monitor the situation and take steps to ensure that the benefits of the move are passed on to borrowers.
Here is a brief explanation of each option:
- Option A: 1st April, 2011. This is the correct answer. The RBI allowed banks to fix their base rates on this date.
- Option B: 1st April, 2012. This is incorrect. The RBI allowed banks to fix their base rates on 1st April, 2011.
- Option C: 1st April, 2013. This is incorrect. The RBI allowed banks to fix their base rates on 1st April, 2011.
- Option D: None of these. This is incorrect. The RBI allowed banks to fix their base rates on 1st April, 2011.