Banking Awareness - Banking Acts, Reforms & Risk Management
Which of the following best differentiates MCLR from the Base Rate system?
Which of the following best differentiates MCLR from the Base Rate system?
hard Q8 of 15
Step-by-Step Solution
Step 1: Recall the core difference
Base Rate relied on average cost.Step 2: Identify MCLR feature
MCLR is based on marginal cost, making it more sensitive.Final Answer:
MCLR is more sensitive to changes in cost of funds → Option DQuick Check:
Sensitivity to cost = MCLR edge ✅
Quick Trick: Average vs marginal cost distinguishes the two.
Common Mistakes:
MISTAKES- Assuming RBI fixes MCLR directly.
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