The MCLR will comprise of:
Marginal cost of funds;
Negative carry on account of CRR;
Operating costs;
Tenor premium.
iii. Marginal Cost of funds
The marginal cost of funds will comprise of Marginal cost of borrowings and return on networth. The detailed methodology for computing marginal cost of funds is given in the Annex.
iv. Negative Carry on CRR
Negative carry on the mandatory CRR which arises due to return on CRR balances being nil, will be calculated as under:
Required CRR x (marginal cost) / (1- CRR)
The marginal cost of funds arrived at (iii) above will be used for arriving at negative carry on CRR.
v. Operating Costs
All operating costs associated with providing the loan product including cost of raising funds will be included under this head. It should be ensured that the costs of providing those services which are separately recovered by way of service charges do not form part of this component.
vi. Tenor premiumThese costs arise from loan commitments with longer tenor. The change in tenor premium should not be borrower specific or loan class specific. In other words, the tenor premium will be uniform for all types of loans for a given residual tenor.
vii. Since MCLR will be a tenor linked benchmark, banks shall arrive at the MCLR of a particular maturity by adding the corresponding tenor premium to the sum of Marginal cost of funds, Negative carry on account of CRR and Operating costs.
viii. Accordingly, banks shall publish the internal benchmark for the following maturities:
overnight MCLR,
one-month MCLR,
three-month MCLR,
six month MCLR,
One year MCLR.
In addition to the above, banks have the option of publishing MCLR of any other longer maturity.
Marginal cost of funds;
Negative carry on account of CRR;
Operating costs;
Tenor premium.
iii. Marginal Cost of funds
The marginal cost of funds will comprise of Marginal cost of borrowings and return on networth. The detailed methodology for computing marginal cost of funds is given in the Annex.
iv. Negative Carry on CRR
Negative carry on the mandatory CRR which arises due to return on CRR balances being nil, will be calculated as under:
Required CRR x (marginal cost) / (1- CRR)
The marginal cost of funds arrived at (iii) above will be used for arriving at negative carry on CRR.
v. Operating Costs
All operating costs associated with providing the loan product including cost of raising funds will be included under this head. It should be ensured that the costs of providing those services which are separately recovered by way of service charges do not form part of this component.
vi. Tenor premiumThese costs arise from loan commitments with longer tenor. The change in tenor premium should not be borrower specific or loan class specific. In other words, the tenor premium will be uniform for all types of loans for a given residual tenor.
vii. Since MCLR will be a tenor linked benchmark, banks shall arrive at the MCLR of a particular maturity by adding the corresponding tenor premium to the sum of Marginal cost of funds, Negative carry on account of CRR and Operating costs.
viii. Accordingly, banks shall publish the internal benchmark for the following maturities:
overnight MCLR,
one-month MCLR,
three-month MCLR,
six month MCLR,
One year MCLR.
In addition to the above, banks have the option of publishing MCLR of any other longer maturity.
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