Marginal Cost of Funds Based Lending Rate-MCLR


 
 
Concept Explanation
 

Marginal Cost of Funds Based Lending Rate (MCLR)

All rupee loans sanctioned and credit limits from 1 April 2016 will be priced with MCLR which will be the internal benchmark. The MCLR will be a tenor linked internal benchmark.

  • Actual lending rates will be determined by adding components of spread to the MCLR.
  • Bank will review and publish their MCLR of different maturities every month on a pre-announced date.
  • Banks may specify interest dates on their floating rate loans. They will have the option to offer loans with reset dates linked either to the date of sanction of the loan / credit limits or to the date of review of MCLR.
  • The periodicity of reset shall be one year or lower
  • The MCLR prevailing on the day the loan is sanctioned will be applicable till the next reset date, irrespective of the changes in the benchmark during the interim period.
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