What methodology has been proposed by RBI on 1st Sep’15 to make Base Rate sensitive to policy changes?

a. Marginal cost of funds Methodology

b. Funds Methodology

c. Currency Methodology

d. All of these

ANSWER: Marginal cost of funds Methodology

Explanation:

The new methodology is aimed at bringing uniformity among Base Rate of banks so that they will be more sensitive to any changes in policy rates of the RBI like Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), etc. At present, banks are following different methodologies in computing their Base Rate like on the basis of average cost of funds, marginal cost of funds or blended cost of funds (liabilities).