Monetary Transmission in a Base Rate Rooted Lending Rate System

The Reserve Bank of India (RBI) is switching from a Marginal Cost of Funds based Lending Rate (MCLR) system to an external benchmark based lending rate system from April 1, 2019. This shift in policy was announced via RBI’s ‘Fifth bi-monthly monetary policy statement for 2018-19’ and was based mainly on ‘The Report of the…