B.P.S.C. C.D.P.O. (Pre) 2018
As per the new methodology, the lending rate is calculated by the banks based on
aaverage cost of funds
brepo rate
cmarginal cost of funds✓ Correct
dinflation rate
eNone of the above/More than one of the above
Explanation
According to the new methodology, a bank’s lending rate is calculated on the basis of the marginal cost of funds. Marginal cost is the cost that arises only when additional units are produced beyond the normal level of production.
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