What is/are the purpose/purposes of the 'Marginal Cost of Funds based Lending Rate (MCLR)' announced by RBI? 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. Select the correct answer using the code given below.
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A hard Economy multiple-choice question from UPSC Prelims 2016. Attempt it above, then check the correct answer and detailed explanation below.
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Correct answer: C. Both 1 and 2
Both are correct — the MCLR framework improves transparency in how banks set lending rates and helps ensure credit is available at rates fair to both borrowers and banks. Option (c).
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