Hike in Marginal Cost of Funds-Based Lending Rate and its Impact

Recently, State Bank of India has raised the marginal cost of funds-based lending rates (MCLR) for the first time in three years.

  • Other banks like Bank of Baroda, Axis Bank, and Kotak Mahindra Bank made 5 basis points hike in the benchmark lending rates.

Reason for Hike

  • The increase in MCLR was done after the RBI’s monetary policy committee or MPC replacing the reverse repo with SDF or the standing deposit facility as the floor rate for liquidity adjustment facility.
  • In effect, it incentivises banks to park more money with the RBI as SDF can earn 3.75 per cent interest as against ....
Do You Want to Read More?
Subscribe Now
To get access to detailed content
Buy June 2022 Issue

Already a Member? Login here

Take Annual Subscription and get the following Advantage
The annual members of the Civil Services Chronicle can read the monthly content of the magazine as well as the Chronicle magazine archives.
Readers can study all the material before the last six months of the Civil Services Chronicle monthly issue in the form of Chronicle magazine archives.
Be an Annual Subscriber

Related Content

Economy Watch