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Multiple Choice Questions

The Reserve Bank of India RBI has introduced from April 1 2016 a new methodology of setting lending ...........

Current GK (RBI Grade B) Indian Economy

The Reserve Bank of India (RBI) has introduced from April 1, 2016, a new methodology of setting lending rate by commercial banks and will replace the existing method identify the new methodology.

This questions was previously asked in

RBI Grade B 2016

View All RBIB Previous Year Papers

PLR

MCLR

Base rate system

BPLR

None of the above

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Explanation:

- MCLR (Marginal Cost of Funds-based Lending Rate): This is the correct answer. Introduced by the RBI in April 2016, MCLR is meant to improve the transparency in rate setting and ensure benefits of interest rate cuts are passed on to borrowers.

- PLR (Prime Lending Rate): An older method where banks set interest rates for prime customers, gradually phased out in favor of other systems.

- Base rate system: The method prior to MCLR, requiring banks to set a minimum interest rate for loans, below which they could not lend.

- BPLR (Benchmark Prime Lending Rate): An earlier system before the base rate, where each bank had its own prime rate which often lacked transparency.

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