What is the MCLR system?

The Marginal Cost of Funds Lending Rate (MCLR) is a system which replaced the base rate system. This replacement was done by the RBI. The MCLR system is used to determine the lending rates for commercial banks. You can read about The Reserve Bank of India: Functions and Composition in the given link.

The MCLR system came into effect from 1st April, 2016.

Further readings:

  1. Non Performing Assets (NPA) – Facts for UPSC GS-III
  2. Monetary Policy – Objectives, Roles and Instruments

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