The conversation between human and AI assistant.
DISSRTTN : What is meant by Marginal Cost of Funds based Lending rate (MCLR) (With an example if possible)?
How does MCLR differ from the base rate system?
The MCLR system is more flexible than the base rate system, as it takes into account the bank's latest borrowing and lending rates. The base rate system, on the other hand, uses the average cost of funds of the bank in the previous quarter to determine lending rates. Also, MCLR is applicable to all new loans and all existing loans that are up for renewal, whereas the base rate system is only applicable to new loans.