Module: | Capital Adequacy, Basel Norms & Monetary Policy
Q33: Regarding the calculation methodology of the Marginal Cost of Funds based Lending Rate (MCLR), which of the following statements are correct?
1. The four explicit components of MCLR are Marginal cost of funds, Negative carry on account of CRR, Operating costs, and Tenor premium.
2. The "Negative carry on mandatory CRR" is calculated as: `Required CRR x (marginal cost) / (1 - CRR)`.
3. The "Operating Costs" component must include costs of providing services, even if they are separately recovered by way of service charges.
4. The change in "Tenor premium" must be uniform for all types of loans for a given residual tenor, and cannot be borrower specific.
2. The "Negative carry on mandatory CRR" is calculated as: `Required CRR x (marginal cost) / (1 - CRR)`.
3. The "Operating Costs" component must include costs of providing services, even if they are separately recovered by way of service charges.
4. The change in "Tenor premium" must be uniform for all types of loans for a given residual tenor, and cannot be borrower specific.
✅ Correct Answer: B
Statements 1, 2, and 4 are correct.
Statement 3 is incorrect because the Directions explicitly state that costs of providing services which are separately recovered by way of service charges shall *not* form part of the "Operating Costs" component of MCLR.
Statement 3 is incorrect because the Directions explicitly state that costs of providing services which are separately recovered by way of service charges shall *not* form part of the "Operating Costs" component of MCLR.