Why in news?

• State Bank of India has raised the MCLR for the first time in three years.
• MCLR instituted by RBI with effect from April 1, 2016.
• It is the lowest interest rate that a bank or lender can offer.
• Brings transparency in financial institutions while determining their interest rates.
• Calculated based on four components:
  • Marginal cost of funds,
  • Negative carry-on account of cash reserve ratio,
  • Operating costs and
  • Tenor premium.
• Tenor means that the amount of time left for the repayment of a bank loan.