Main Note - [Base Rate System - 2010](Interest%20Rates%20on%20Loans%20&%20Advances.md#Base%20Rate%20System%20-%202010) in [Interest Rates on Loans & Advances](Interest%20Rates%20on%20Loans%20&%20Advances.md) ## Method to find Base Rate 1. [Link](RBI_Notification_20150701_%20Master%20Circular%20-%20Interest%20Rates%20on%20Advances.pdf#page=13) to Illustrative Methodology for the Computation of the Base Rate (Paragraph 3.2) in [Master Circular](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=9844) - Interest Rates on Advances, dated July 1, 2015. 2. Here weight (NW/deployable deposits) gets assigned to Return on Equity/Return on net-worth but not to cost of deposits. 3. [Marginal Cost of Funds-based Lending Rate (MCLR) System-2016](Interest%20Rates%20on%20Loans%20&%20Advances.md#Marginal%20Cost%20of%20Funds-based%20Lending%20Rate%20(MCLR)%20System-2016) resolved this by explicitly weighting them as 92% for Borrowings and 8% for Net Worth, eliminating that double-counting of funding sources. ## Related Notes 1. [MCLR Formula](MCLR%20Formula.md) 2. [Interest Rates on Loans & Advances](Interest%20Rates%20on%20Loans%20&%20Advances.md) 3. [Interest Rates on Deposits](Interest%20Rates%20on%20Deposits.md)