The Reserve Bank of India has convened a meeting of bank chairmen and managing directors on September 16 to discuss ways to formulate the benchmark prime lending rate, which is expected to be introduced by this month-end.

Rakesh Mohan, deputy governor, RBI, would chair the meeting of the bank chief executives to review the ground work done by senior banking industry officials, S C Gupta, chairman and managing director, Indian Overseas Bank, told reporters in Mumbai on Friday.

The apex bank held discussions with bank general managers and executive directors in August on fixing the benchmark PLR taking into account various factors, including actual cost of funds, operating expenses and non-performing assets, he said.

The benchmark PLR would be introduced in place of the tenor-linked PLR, which RBI decided to discontinue.

RBI's close interaction with the bank officials follows the announcement on the need for a benchmark PLR in the credit policy for 2003-04 (April) by the then RBI Governor Bimal Jalan.

R V Sastry, chairman and managing director, Canara Bank, said banks could benchmark the PLR for fixing the actual rate of interest for borrowers adding other factors such as tenor and risk.

Dalbir Singh, chairman and managing director, Central Bank of India, said public sector banks had their PLR around 11 per cent as against a variation seen among the private sector banks.