Each bank deciding its own benchmark lending rate has impeded transmission

Banks have almost always been unable to pass on the RBI’s rate action in its entirety. Lending rates have always moved with a lag and by smaller proportions in relation to policy rates. In an attempt to fix these issues, the regulator has been revamping the interest rate structure time and again. In its latest attempt, the RBI had shifted from the base rate to the MCLR regime.But MCLR yet again ...