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    Question

    Which of the following has replaced the earlier Base

    Rate System, for determining lending rates for commercial banks.
    A Marginal Cost of Funds based Lending Rate Correct Answer Incorrect Answer
    B Statutory Liquidity Ratio Correct Answer Incorrect Answer
    C Cash reserve ratio Correct Answer Incorrect Answer
    D Bank Rate Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    • MCLR full form is Marginal Cost of Funds based Lending Rate.
    • The Reserve Bank of India (RBI) gives a fixed Internal Reference Rate for banks under it.
    • This Interest Rate is used by all banking and non-banking institutions as their minimum interest rate applicable for lending any loan. It has replaced the earlier Base Rate System, which was introduced in the year 2010, for determining lending rates for commercial banks.

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