BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Marginal Rate system
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Bank Rate system
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Repo Rate system
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Base Rate system
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Detailed explanation-1: -Subsequently, the Reserve Bank replaced PLR with benchmark prime lending rate (BPLR) to serve as a reference rate for banks in 2003.
Detailed explanation-2: -What Is the Current Prime Rate? As of February 2, 2023, the current prime rate is 7.75% in the U.S., according to The Wall Street Journal’s Money Rates table. This source aggregates the most common prime rates charged throughout the U.S. and in other countries. The federal funds rate is currently 4.50% to 4.75%.
Detailed explanation-3: -The prime rate is the interest rate that commercial banks charge their most creditworthy customers, generally large corporations. The prime interest rate, which is also called the prime lending rate, is largely determined by the federal funds rate set by the Federal Open Market Committee (FOMC).
Detailed explanation-4: -Why is MCLR preferred over the traditional base rate? Before MCLR, banks computed the base rate in a variety of ways with a lack of standardisation. Because of this, the base rate mechanism, which is connected to a bank’s cost of funds, was unable to provide the desired level of transparency.