The experience with the marginal cost of funds based lending rate (MCLR), which was introduced in April 2016 for improving monetary transmission, has not been entirely satisfactory even though it has been an advance over the earlier base rate system, according to Viral Acharya, Deputy Governor, RBI.
“We have constituted an internal study group across several clusters to study the various aspects of the MCLR system and to explore whether linking of the bank lending rates could be made direct to market determined benchmarks going forward. The group will submit the report by September 24, 2017,” he said.