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RLLR vs MCLR which is better

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Since we are discussing RLLR vs MCLR which is better, I will share the distinction between the two and let you be the judge. Differentiation will help you understand which is better. So, difference between MCLR and RLLR which is better. 

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Difference between RLLR and MCLR:

 

RLLR

MCLR

RLLR Is linked to the Repo rate based on RBI.

MCLR Is a rate below which a bank cannot charge its customers.

RLLR is an external benchmark linked to RBI’s repo rate.

MCLR is a bank's internal mark which cannot be changed.

The reset period of the RLLR is three months and EMI can be revised every three months. 

The reset rate of MCLR is between six to one year. Hence banks usually revise their rate annually or half-yearly.

The transmission rate changes are fast.

The transmission rate is relatively slow.

The full form of RLLR Is a repo-linked lending rate.

The full form of MCLR is the Marginal Cost of Funds Based Landing Rate.

 

In a nutshell, RLLR enjoys more transparency and benefits than MCLR. MCLR is more stable if you estimate the repo rate to rise. I hope you now know RLLR vs MCLR which is better.

 

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