{"id":2736,"date":"2023-02-16T08:40:53","date_gmt":"2023-02-16T03:10:53","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=2736"},"modified":"2025-03-25T23:59:07","modified_gmt":"2025-03-25T18:29:07","slug":"what-is-marginal-cost-of-funds-based-lending-rate-mclr","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-marginal-cost-of-funds-based-lending-rate-mclr\/","title":{"rendered":"What is Marginal cost of funds-based lending rate (MCLR)?"},"content":{"rendered":"<h2>About Marginal cost of funds-based lending rate:<\/h2>\n<ul>\n<li>It is the minimum interest rate below which no bank is permitted to lend money.<\/li>\n<li>\u00a0It is <strong>determined by banks internally<\/strong>, depending upon the loan repayment time.<\/li>\n<li>The Reserve Bank of India introduced the MCLR methodology for fixing interest rates on 1 April 2016.<\/li>\n<li>\u00a0It replaced the <strong>base rate structure<\/strong>, which had been in place since July 2010.\u00a0\u00a0<\/li>\n<li>The rate is determined internally by the bank depending on the period left for the repayment of a loan.<\/li>\n<li>MCLR is calculated based on four components <strong>Marginal cost of fund, Negative carry on account of cash reserve ratio, Operating costs, Tenor premium<\/strong><\/li>\n<\/ul>\n<h3>What is the difference between MCLR and base rate<\/h3>\n<ul>\n<li>MCLR is an advanced version of the base rate.<\/li>\n<li>The base rate is based on the average cost of funds, but MCLR is based on the marginal or incremental cost of money.<\/li>\n<li>\u00a0MCLR depends on the repo rates changed by RBI while Base Rate does not depend on the repo rates changed by RBI.\u00a0<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>\u00a0Q1) What is base rate?<\/h3>\n<p>Base rate is the minimum rate set by the Reserve Bank of India below which banks are not allowed to lend to its customers.<\/p>\n<p><strong>Source:<\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/banks-mclr-hike-rbi-repo-rate-8445933\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>\u00a0Why SBI, BoB, IOB have raised MCLR by up to 15 bps, and what its impact could be<\/u><\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>MCLR is the minimum interest rate below which no bank is permitted to lend money.<\/p>\n","protected":false},"author":5,"featured_media":2737,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-2736","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/2736","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=2736"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/2736\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/2737"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=2736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=2736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=2736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}