Loan framework: RBI proposes new MCLR formula based on 3-month moving average of funding costs

The RBI has proposed a new formula for calculating banks’ Marginal Cost of Funds Based Lending Rate (MCLR), using a three-month moving average of the marginal cost of domestic deposits and borrowings. The proposed methodology is part of a broader framework to make loan pricing more consistent and transparent, with the new rules proposed to take effect from April 1, 2027.