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  1. Home
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International Relations·Easy

Which of the following is/are the reason(s) for implementing the Marginal Cost of funds based Lending Rate (MCLR) system in India? 1. To improve the transmission of the monetary policy. 2. To ensure that bank credit is available at interest rates which are fair to both borrowers and lenders. Select the correct answer using the code given below:

Which of the following is/are the reason(s) for implementing the Marginal Cost of funds based Lending Rate (MCLR) system in India?

1. To improve the transmission of the monetary policy.

2. To ensure that bank credit is available at interest rates which are fair to both borrowers and lenders.

Select the correct answer using the code given below:

Options

  1. a.

    1 only

  2. b.

    2 only

  3. c.

    Both 1 and 2

    Correct answer
  4. d.

    Neither 1 nor 2

Explanation

The main reasons for implementing the MCLR system are: (a) To improve the transmission of the monetary policy; (b) To bring transparency in the methodology of banks to fix interest rates; and (c) To ensure that bank credit is available at interest rates which are fair to both borrowers and lenders.

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