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Question

As per the existing RBI guidelines the minimum interest rate at which banks can lend is called as- 

A Base Rate Correct Answer Incorrect Answer
B BPLR Correct Answer Incorrect Answer
C MCLR Correct Answer Incorrect Answer
D Bank Rate Correct Answer Incorrect Answer
E CRR Correct Answer Incorrect Answer

Solution

The marginal cost of funds based lending rate (MCLR) refers to the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. It is an internal benchmark or reference rate for the bank. The MCLR methodology for fixing interest rates for advances was introduced by the RBI with effect from April 1, 2016.

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