Question
What is the full form of "MCLR"?
Solution
MCLR stands for Marginal Cost of Funds based Lending Rate. It was introduced by the Reserve Bank of India (RBI) in 2016 to bring more transparency to the lending rates of banks. Under the MCLR system, banks set their lending rates based on their marginal cost of funds, ensuring that lending rates are closely linked to the cost of acquiring funds, which ultimately impacts borrowers.
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