The review will be done to assess the extent of the banks compliance with the Reserve Bank of Indias (RBI) directive to ensure that the lending rates reflect the prevalent low-interest rate regime.

The RBI had pointed out that some banks have been maintaining "very high spreads" over their prime-lending rate. It had urged them to review the rates to ensure that the borrowers are able to access credit at "reasonable interest rates." Banks may also have to provide details of the level of transparency adopted by them in fixing the lending rates as has been desired by the central bank.

The RBI had asked banks to not only come out in the open about their maximum and minimum lending rates but also to adopt an "all-cost" concept for borrowers by providing details on all charges, such as processing and service charges.

The review of lending rates forms part of the formal agenda of the meeting, which has been now rescheduled for 29 June 2002. The meeting, originally fixed for 19 June 2002, was rescheduled due to Sinhas visit abroad.