Bank Negara Malaysia (BNM) has proposed that banks introduce
a prime financing rate (PFR) to replace the base lending rate
(BLR) as the reference for pricing retail loans, bankers said.
BNM briefed senior bankers last Thursday on its proposal for
a new reference rate framework for the industry to price retail
loans. The briefing was chaired by governor Zeti Akhtar Aziz.
"It was proposed that a PFR - set by the respective banks -
replace the BLR for the pricing of all retail loans," said a
retail banker who spoke to The Edge Financial Daily on condition
This suggest that banks will quote their lending rates as
"PFR plus (a spread)", rather than the current practice of "BLR
minus (a spread)", he said.
The PFR of each bank would be calculated based on the
benchmark cost of funds plus the statutory reserve requirement
(SRR), he said. The spread will reflect the bank's profit
margin, operating costs and credit risk, among other things.
-The Edge Financial Daily
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