| 1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances. |
| 2. These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks. |
A) 1 only
B) 2 only
C) Both 1 and 2
D) Neither 1 nor 2
Correct Answer: C
Solution :
| (i) With effect from 1st April, 2016, all loans in India shall be priced with reference to Marginal |
| Cost of Funds based Lending Rates (MCLR) which will comprise of 1. Marginal Cost of Funds 2. Negative carry on account of CRR Operating Costs 4. Tenor of premium. Banks shall review and publish their MCLR every month on a pre-announced date. Marginal Cost of Funds will comprise of marginal cost of borrowings and return on net-worth. |
| (ii) Both right. Verbatim lifted from RBI's press statement first paragraph. |
| Ref https://rbi.org.in/SCRIPTs/BS_PressRelease |
| Display.aspx? prid =3 5749 |
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