The conversation between human and AI assistant.
How mclr is different from base rate, and how customers are benefitted?
Can you give me an example of how this works in practice?
Of course. Let's say that a bank's MCLR is currently 8%, with a spread of 0.5%. This means that its lending rate is 8.5%. If the bank's cost of funds decreases, the MCLR will also decrease, and the lending rate will be adjusted accordingly. This can mean lower EMI payments for borrowers.