You can group BGP neighbours who share the same outbound policies together in what is called a BGP peer group. Instead of configuring each neighbour with the same policy individually, a peer group allows you to group the policies which can be applied to individual peers thus making efficient update calculation along with simplified configuration.

All neighbours parameters are applied to the peer-group itself. Configuration is simple:

Example for R1

Router1(config)# router bgp 200 

Router1(config-router)# neighbor PEERGROUPABC peer-group 

Router1(config-router)# neighbor PEERGROUPABC remote-as 501 

Router1(config-router)# neighbor PEERGROUPABC Password A123

Router1(config-router)# neighbor PEERGROUPABC Version4

The above configuration creates a peer-group named PEERGROUPABC, and applies the desired settings. Next, we must “assign” the appropriate neighbours to the peer-group:

Router(config-router)# neighbor 1.0.0.2 peer-group PEERGROUPABC 

Router(config-router)# neighbor 2.0.0.2 peer-group PEERGROUPABC 

Router(config-router)# neighbor 4.0.0.2 peer-group PEERGROUPABC

The above neighbours now inherit the settings of the peer-group named PEERGROUPABC.

All “members” of a peer-group must exclusively be internal (iBGP) peers or external (eBGP) peers. A mix of internal and external peers is not allowed in a peer-group

Benefits of BGP Peer Groups:

The major benefit you achieve when you specify a BGP peer group is that a BGP peer group reduces the amount of system resources (CPU and memory) necessary in an update generation. In addition, a BGP peer group also simplifies the BGP configuration. A BGP peer group reduces the load on system resources by allowing the routing table to be checked only once, and updates to be replicated to all peer group members instead of being done individually for each peer in the peer group.