Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Marginal Cost of Funds based Lending Rate is the internal benchmark rate used by banks to price floating-rate loans before widespread repo linkage.
MCLR is the bank's base rate for loans — your home loan rate is often MCLR plus a spread that can change when MCLR moves.
Introduced 2016 replacing base rate. Computed from marginal cost of deposits, borrowings, negative carry on CRR, operating costs, and tenor premium. Reset periodicity minimum one year for MCLR-linked retail loans. Most new loans now linked to external benchmark (RLLR) per RBI mandate.
Bank MCLR 1-year 8.2% plus spread 0.4% → home loan 8.6%. MCLR cut 25 bps next year → your rate drops to 8.35% at reset date.
RBI mandated external benchmark (repo) linkage for new floating retail loans from Oct 2019. Legacy MCLR loans continue till transfer.
Spread adjustment, reset date not yet reached, or loan still on MCLR with sticky deposit costs delay transmission.
Most banks allow switch on request, sometimes with one-time fee. Compare spread and reset frequency.