[Solved] Consider the following statements regarding MCLR: Statement 1: MCLR is calculated based on average cost of funds. Statement 2:... Which of the above statements is/are correct? | Banking Awareness

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Consider the following statements regarding MCLR: Statement 1: MCLR is calculated based on average cost of funds. Statement 2: MCLR ensures uniform lending rates across all banks. Which of the above statements is/are correct?

AOnly Statement 2 is correct

BBoth Statement 1 and Statement 2 are correct

CNeither Statement 1 nor Statement 2 is correct

DOnly Statement 1 is correct

Step-by-Step Solution

Step 1: Check Statement 1
MCLR is based on marginal cost, not average cost.
Step 2: Check Statement 2
MCLR does not create uniform lending rates across banks.
Final Answer:
Neither Statement 1 nor Statement 2 is correct → Option C
Quick Check:
Marginal cost + bank-specific rates = MCLR ✅

Quick Trick: MCLR ≠ average cost, ≠ uniform rates.

Common Mistakes:

MISTAKES

Confusing MCLR with Base Rate features.

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Which of the above statements is/are correct?

Step 1: Check Statement 1

Step 2: Check Statement 2

Final Answer:

Quick Check:

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