3%), but a month later a new borrower might get a loan at a lower MCLR if the cost of funds
Banks use marginal cost of funds
when there is sufficient liquidity available at that rate to fund a reasonable proportion of the asset portfolio.
The group has suggested that if banks continue to use the weighted average cost of funds
because of their deposit profile or any other methodology that may result in differentiation between old and new customers, their boards should ensure that this differentiation does not lead to discrimination between borrowers.
Because of this type of rate fluctuation, it is important that credit unions take the long view when they forecast their future cost of funds
An unusually steep and sustained decline in the cost of funds
to issuers and the lingering effects of the last recession, which saw outstanding balances on credit cards grow at a much reduced pace, have exerted downward pressure on credit card interest rates.
The market alternative cost of funds
is 8%, the savings account interest expense is 4% and the service expense is 2%, representing a cost advantage of 2% (8% - (4% + 2%)).
Our concerns stem from: (1) the mandatory substitution of an external interest rate in lieu of the taxpayer's specific cost of funds
and (2) the likely exacerbation of the propensity of the proposed regulations to overcapitalize interest.
New Delhi: The Reserve Bank of India (RBI) in its monetary policy announcement on Wednesday kept key interest rates at hold, but its observations on Marginal Cost of Funds
based Lending Rates (MCLR) may bring cheers to Pre-April 2016 home loan borrowers.
Marginal cost of funds
is the extra cost a bank bears any additional borrowing.
According to a finance department official, the corporation can afford to offer higher interest rates as cost of funds
is much lower.
The Reserve Bank of India has prescribed a 12 percent margin cap (difference between cost of funds
and lending rate).