Banking Awareness - Banking Acts, Reforms & Risk Management
Which of the following best explains why RBI introduced the MCLR system?
Which of the following best explains why RBI introduced the MCLR system?
easy Q2 of 15
Step-by-Step Solution
Step 1: Recall the problem with earlier systems
Policy rate changes were not passed on quickly.Step 2: Identify RBI’s objective
MCLR was designed to improve transmission of policy rates.Final Answer:
To improve monetary policy transmission → Option BQuick Check:
Faster RBI impact = MCLR goal ✅
Quick Trick: Transmission improvement always points to MCLR.
Common Mistakes:
MISTAKES- Assuming MCLR standardises rates across banks.
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