RBI/2010-11/411
DBOD.Dir.BC. 81/13.03.00/2010-11

February 21, 2011

All Scheduled Commercial Banks
(excluding RRBs)

Dear Sir / Madam

Guidelines on Base Rate

Please refer to our circular No. DBOD.Dir.BC.88/13.07.001/2009-10 dated April 9, 2010 and our letter DBOD.Dir.No. 21957/13.07.001/2009- 10 dated June 24, 2010 addressed to IBA on the subject.

2. Government of India, Ministry of New and Renewable Energy (MNRE) has formulated a scheme on financing of Off-Grid and Decentralised Solar (Photovoltaic and Thermal) applications as part of the Jawaharlal Nehru National Solar Mission (JNNSM). Under the scheme, banks may extend subsidised loans to entrepreneurs at interest rates not exceeding five per cent where refinance of two per cent from Government of India is available. In this context, we advise that such lending at interest rates not exceeding five percent per annum where refinance of Government of India is available, would not be considered to be a violation of our Base Rate Guidelines.

Yours faithfully,