MANU/RPRL/0093/2016

Ministry : Reserve Bank of India

Department/Board : RBI

Press Release No. : 2015-2016/2279

Date : 29.03.2016

Notification/ Circulars Referred : Circular DBR.No.Dir.BC.67/13.03.00/2015-16 dated December 17, 2015 MANU/RMIC/0398/2015

Citing Reference:
Circular DBR.No.Dir.BC.67/13.03.00/2015-16 dated December 17, 2015 MANU/RMIC/0398/2015  Referred

RBI clarifies its Directions on MCLR System

The Reserve Bank of India today clarified some of the provisions of Reserve Bank of India (Interest Rate on Advances) Directions, 2016 (hereinafter called the Directions) relating to the Marginal Cost of Funds based Lending Rate (MCLR) system which comes into effect on April 01, 2016. The changes are:

1. Fixed Rate Loans

As per Section 13(d)(v) of the Directions, fixed rate loans are exempted from being linked to MCLR as the benchmark for determining interest rate. On a review, it has been decided that fixed rate loans upto three years shall be priced with reference to MCLR. Fixed rate loans of tenor above three years will continue to be exempted from MCLR system. Accordingly, Section 13(d)(v) of the Directions has been modified.

2. Computing Marginal Cost of Funds

As per Annex to Section 6(b) of the Directions, for computing Marginal Cost of Funds, balances of deposits and other borrowings outstanding as on the previous day of review shall be reckoned. On a review, it has been decided that banks will have the option to reckon the outstanding balances of deposits and other borrowings as on any day, not more than seven calendar days, prior to the date from which the MCLR becomes effective. The chosen time lag shall be maintained consistently for a period not less one year. Accordingly, Annex to Section 6(b) of the Directions has been modified.

3. MCLR of Various Maturities