in the utilisation of bank credit. furthermore, the reserve bank relaxed the requirement of plr being the floor rate for loans above rs. 2 lakh. thus, in april 2001, commercial banks were allowed to lend at sub - plr rates for loans above rs. 2 lakh. however, the divergence in plrs and the widening of spreads for borrowers continued to persist. the plrs turned out to be rigid and inflexible in relation to the overall direction of interest rates in the economy. in order to address these issues, a bplr system was introduced in april 2003. 5. however, the bplr system evolved in a manner that did not meet the objectives. competition in an environment of excess liquidity had forced the pricing of a significant proportion of loans far out of alignment with bplrs undermining its role as a reference rate. furthermore, there was a growing public perception of under - pricing of credit for corporates and over - pricing of credit to agriculture as well as small and medium enterprises. several requests were received by the reserve bank from banks suggesting a review of the bplr system. 6. the lack of transparency in the bplr system also hindered transmission of monetary policy signals. in view of the concerns pertaining to the shortcomings in the bplr system raised by the public and those recognised by the reserve bank, the annual policy statement for 2009 – 10 announced the constitution of a working group on bplr to review the bplr system and suggest changes to make credit pricing more transparent. on the basis of the recommendations of the working group ( chairman : deepak mohanty ) and after taking into account the views of various stakeholders and discussions with banks final guidelines on the base rate system were announced on april 9, 2010. ii. the base rate system 7. the base rate system will replace the bplr system with effect from 1st july 2010. base rate shall include all those elements of the lending rates that are common across all categories of borrowers. banks may choose any benchmark to arrive at the base rate for a specific tenor that may be disclosed transparently. banks are free to use any other methodology, provided it is consistent, and is made available for supervisory review. banks will determine their actual lending rates on loans with reference to the base rate and by including such other customer specific charges as considered appropriate. 8. with the introduction of the base rate system, all categories of loans will be priced only with reference to the

key commodities and threatened inflation to get out of control, we shifted our focus from growth to controlling inflation. we frontloaded our monetary policy actions and changed our stance to withdrawal of accommodation. we remained nimble and agile in our liquidity management operations. further, fiscal - monetary coordination – reserve bank ’ s rate hikes along with proactive supply side measures by the government – helped in controlling inflation and anchoring inflation expectations. 11. coming to a more recent period, the mpc in its meeting on october 7 - 9, 2024 took note of the prevailing and expected inflation - growth dynamics and decided to change the monetary policy stance from withdrawal of accommodation to ‘ neutral ’. it also decided to remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth. the change in stance provides greater flexibility and optionality to act in sync with the evolving conditions and the outlook. 12. overall, while average growth during 2021 - 24 remained buoyant at above 8. 0 per cent, the receding of headline inflation in 2023 - 24 and 2024 - 25 ( up to september ) to within the tolerance band bears testimony to the success of the reserve bank ’ s policies. what is equally important is that all these actions did not undermine financial stability. our rate hikes were preceded or accompanied by prudent risk management practices in the form of greater flexibility to banks in holding government securities under the held to maturity ( htm ) category that minimised marked - to - market losses. it is evident that while designing our responses to both the pandemic and the inflation upsurge, our policies were nimble, flexible and balanced. we remained consistent with our mandate of “ price stability while keeping in mind the objective of growth ”. the underlying mandate of maintaining financial stability was also adhered to. central bank communication 13. during this entire period, communication became an important tool to complement our policy actions. during the pandemic, our endeavour was to give confidence to the wider economy, financial markets and the public at large. in the monetary policy statement on april 17, 2020 in the early part of the lockdown, i had said “ although social distancing separates us, we stand united and resolute. eventually, we shall cure ; and we shall endure ”. we began using quotes from mahatma gandhi like “ …. in the midst of death life persists …. in the midst of darkness light persists ” (