Monetary Policy

MARGINAL COST OF FUND BASED LENDING RATE (As on 11 August 2022)

👉🏻 RBI introduced Marginal Cost of Funds Based Lending Rate(MCLR) system in2026 for improving the monetary transmission.

👉🏻  MCLR is set by each bank based on current cost of funds while base rate was calculated based on overall cost of funds.

👉🏻 MCLR may ensure quicker  transmission of the RBI rate cuts to borrowers as after every rate change by the RBI, the MCLR is bound to reflect it.