FirstRand Bank Mclr Rate
MCLR (marginal cost of funds based lending rate) is the lowest interest rate that a bank or lender can offer. Most banks cannot offer HOME LOAN interest rates lower than the marginal cost of funds based lending rate. However, certain exceptions can be made when allowed by the Reserve Bank of India (RBI).
Difference Between MCLR And Base Rate
The MCLR is a reference rate or internal benchmark for the financial institution. Marginal cost of funds based lending rate defines the process used to determine the minimum home loan rate of interest. The MCLR method was introduced in the Indian financial system by the Reserve Bank of India in the year 2016. The MCLR system has replaced the base rate system that was introduced in the year 2010. Thus, renewal of credit limits and sanctioning of loans is done as per MCLR norms.
Aims Of MCLR:
- Improving transmission of the policy rate into lending rates of the banks.
- Bringing in transparency in the method followed by various banks for the determination of interest rates.
- Ensuring the availability of bank loan at rates that fair to both lenders and borrowers.
- Enabling the lenders and banks to be competitive and improve their worth in the long run.
What Is MCLR Rate In Home Loan?
MCLR is closely linked with the repo rate and fund costs of the banks. Thus, if there is a change in the repo rate, it will have an impact on your home loan’s floating rate of interest. If a bank brings down the marginal cost of funds based lending rate, the floating rate of interest associated with your home loan also comes down. This will not be affecting your equated monthly instalments but the tenure of the loan will get impacted.