RBI group to study MCLR regime so that your bank reduces loan rate

Mulls linking lending rates directly to market benchmarks

Voicing displeasure over banks not doing enough to reduce lending rates, the Reserve Bank of India (RBI) said an internal group would review the working of the system to improve transmission. The central bank will also explore ways to link bank lending rates directly to market-determined benchmarks.
 

Though the marginal cost of funds-based lending rate (MCLR) system is an improvement over the base rate system, monetary transmission by banks has not been “not entirely satisfactory”, the RBI said in statement on developmental and regulatory policies.

“The decision to review the MCLR system with a view to improve monetary policy transmission is