BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Ratio
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Reimburse
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Risk
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Rates
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Detailed explanation-1: -The hike is effective from January 1, 2023. Bank of India have hiked MCLR by up to 15 bps across MCLR tenures. According to the Bank of India website, one month MCLR is at 7.75%, three month and six month MCLR is at 7.80%, 8.05% respectively.
Detailed explanation-2: -Repo Rate (RR) is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks or financial institutions in India against government securities. The current Repo Rate 2022 is at 4.40%. Changes in Repo Rate affect the flow of money in the market.
Detailed explanation-3: -The spread, in simple terms, means the amount or margin that you have to pay over the MCLR. Banks are free to set the range of spread on different loans. For Example, if the MCLR is 11%. But the rate of interest offered by the bank is 11.25%. The difference is the spread imposed by the bank, i.e., 0.25%.
Detailed explanation-4: -Cost of borrowings: Based on the cost of borrowings, the RBI has determined the following formula for calculating MCLR: MCLR = (Marginal borrowing cost * 92%) + (Return on net worth * 8%)