Question

Q. With reference to the ‘marginal cost of funds-based lending rate (MCLR)’ which of the following statements is/are correct?

Select the correct answer using the codes given below:

• A. 1 only
• B. 1 and 2 only
• C. 2 and 3 only
• D. 1, 2 and 3

Answer 1

The correct option is C 2 and 3 only

Explanation:

Statement 1 is incorrect: MCLR methodology was introduced by RBI for fixing interest rates in 2016. The marginal cost of a funds-based lending rate (MCLR) is the minimum interest rate that a bank can lend at.

Statement 2 is correct: The MCLR regime was brought to transfer the benefits of rate cuts by RBI to the customer in almost the same proportion.

Statement 3 is correct: Under the MCLR regime, banks are free to offer all categories of loans on fixed or floating interest rates.