Also called: Marginal cost of funds based lending rate
Marginal cost of funds based lending rate: an internal benchmark each bank sets from its own cost of funds. Floating loans taken between April 2016 and September 2019 were usually linked to it.
How it works and what to check
An MCLR loan resets only on its reset date, often every six or twelve months, so changes in the repo rate reach it slowly.
Borrowers on MCLR can ask their bank to move to its repo-linked rate, or transfer the loan, if the new rate is lower after fees.
Common questions
Should I switch from MCLR to EBLR?
Compare your current rate with the bank's repo-linked rate for your profile, after any switching fee.
Do new home loans use MCLR?
New floating-rate retail loans must be linked to an external benchmark, usually the repo rate.