- What is MCLR?
- The marginal cost of the Lending rate is the benchmark rate, below which a scheduled Commercial Bank is not allowed to lend. RBI introduced this measure w.e.f 1st April 2016.
- MCLR-linked loans had the largest share of 53.1 % of the loan portfolio of the Banks as of December 2021. FBIL is a private entity that ensures the transmission of policy rates from the Central Bank to the Scheduled Commercial Banks.
- Repercussions of increase in MCLR
- Equated Monthly Installment (EMI) will go up
- Interest rate of the Bank will rise
- Why the rise in MCLR?
- The Consumer Price Index (c) has shot up to 6.95%, breaching the RBI’s mandated threshold.
- The Wholesale Price Index has gone up to 14.55%, registering inflation at a skyrocketing level.
- Therefore SBI has resorted to a contractionary Monetary Policy by raising MCLR.
- From 7% to 7.10%. It would amount to a raised interest rate, thus being able to contain inflation.
Question:
Q.1 What is the new MCLR proposed by the State Bank of India?a. 7.0%
b. 7.10%
c. 6.0%
d. 7.25%
