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UPSC 2016: 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:
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2
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Not attemptedCorrect Answer: (c) Both 1 and 2
RBI’s 2016 MCLR framework aimed (1) to make banks’ loan-pricing methodology transparent and policy-rate sensitive, and (2) to ensure credit is extended at rates fair to both borrowers and banks by linking lending rates to the marginal cost of funds. Both stated purposes are part of RBI’s guidelines; hence both statements are correct and option (c) is the answer. ([testbook.com](https://testbook.com/question-answer/ques--5f44d15fd506c00d14ffa7d7?utm_source=openai))
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Frequently Asked Questions
What is the correct answer to this UPSC 2016 Indian Economy question?▼
The correct answer is option (c): Both 1 and 2. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Banking & Financial Sector question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2016, GS Paper 1, as Question 43. It falls under Indian Economy > Banking & Financial Sector.
What is the difficulty level of this UPSC question?▼
This question is rated "moderate". It requires sound conceptual understanding of the topic.
How many UPSC Prelims questions have been asked from Banking & Financial Sector?▼
UPSC has asked 48 questions from Banking & Financial Sector (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.