The Reserve Bank of India has brought a new methodology of setting lending rate by commercial BANKS under the name MARGINAL Cost of FUNDS based Lending Rate (MCLR). It has modified the EXISTING base rate system from April 2016 onwards.

As per the new guidelines by the RBI, banks have to prepare Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal BENCHMARK lending rates. Banks have to set five benchmark rates for different tenure or time periods ranging from overnight (one day) rates to one year.

The Reserve Bank of India has brought a new methodology of setting lending rate by commercial banks under the name Marginal Cost of Funds based Lending Rate (MCLR). It has modified the existing base rate system from April 2016 onwards.

As per the new guidelines by the RBI, banks have to prepare Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal benchmark lending rates. Banks have to set five benchmark rates for different tenure or time periods ranging from overnight (one day) rates to one year.