The MCLR is a reference rate or internal benchmark for the financial institution. Marginal cost of funds based lending rate defines the process used to determine the minimum home loan rate of interest. The MCLR method was introduced in the Indian financial system by the Reserve Bank of India in the year 2016. The MCLR system has replaced the base rate system that was introduced in the year 2010. Thus, renewal of credit limits and sanctioning of loans is done as […]
MCLR Rate Vs Base Rate
MCLR vs Base Rate.
What is Base Rate? Our Central Bank (RBI) sets a minimum rate for loan borrowers below which banks are not allowed to lend money that is termed as Base rate. This was done to ensure that the customers would receive lower cost of funds with transparency in the credit market. Why use it over Base rate for loan computation? Till 1st April 2016, banks were using Base rate (introduced in the year 2010) for calculating interest on loan. This replaced […]