According to a statement issued by Bank Negara in August last year, the current Base Rate (BR) lending framework will begin to be replaced by a new lending framework known as Standardised Base Rate (SBR). The existing Base Rate lacks comparability and transparency. The Base Rate adopted by each bank is different. When lenders compare the loan interest rates provided by various banks, there is confusion and difficulty in comparison.
The new Standardised Base Rate will be more transparent, making it easier for lenders to understand changes in interest rates and repayments on loans. Standardised Base Rate will only be linked to OPR. If the OPR is increased by 0.25%, then the SBR will also increase by 0.25%.
SBR applies to floating rate loans, not fixed rate loans. With a unified reference SBR rate, lenders can more easily see which bank offers more attractive rates.
Bank Negara has given financial institutions a year to adjust, while existing borrowers will not be affected for the time being. This measure will be officially adopted from August 1, 2022.
