23 DECEMBER, 2022

When you decide to buy a home of your own, borrowing a home loan is the best way to make this dream a reality. Home loan lenders can offer you a home loan with either the Repo Linked Lending Rate (RLLR) or the Marginal Cost of Fund Based Lending Rate (MCLR). You must know everything about these to understand your home loan better.

What is Repo Linked Loan Rate (RLLR)?

The RLLR full form is Repo Linked Loan Rate and as the name suggests, the RLLR rate is linked to the Repo rate set by RBI and is revised from time to time. All the banks have different RLLR RATE.

The RLLR full form tells you what it actually is- a loan rate linked to the repo rate. It depends on many factors, for example, the loan amount, risk groups, loan-to-value, etc. When lending is done based on the RLLR interest rate the home loan interest rate moves up and down based on the change in the repo rate.

What is the Marginal Cost of a Fund-Based Lending Rate (MCLR)?

MCLR means the rate below which a bank cannot charge its customers. It is set by the bank adhering to the guidelines set by the RBI for it.

The MCLR full form- MCLR full form in banking is suggestive of its function. It is the lowest rate at which Banks can lend funds. MCLR rate means a reference rate for banks to decide the interest rate they can charge on loans. 

MCLR v/s RLLR- What is the Difference?

Here are some key differences between MCLR and RLLR. that will help you understand what is MCLR and RLLR

S. No. Parameters MCLR RLLR


Benchmark Link

Internal mechanism of Bank

External(RBI Repo Rate)


Reset period

Varies from Bank to Bank but is usually 6-12 months

3 months


Transmission rate

Comparatively slower

Faster Transmission


Benchmark Linking

In RLLR: It’s an external benchmark linked to RBI’s Repo Linked Lending Rate. If there’s a change in the repo rate by RBI, it would also affect your home loan interest rate.

In MCLR: It’s an internal benchmarking where the bank sets interest rate considering its cost of funds. The repo rate is not the only factor affecting the interest rate, but factors like banking system liquidity, low-cost deposits, etc., also affect it.

Reset Period

In RLLR: The reset period in RLLR Rate is three months which means your EMI can be revised every three months. This is beneficial because borrowers can enjoy the repo rate cut through lower EMIs. However, if the repo rates escalate, a similar impact is seen on the EMI payouts as well.

In MCLR: The reset period is usually six months or a year. Hence, banks may choose to revise their interest rates half-yearly or annually. This gives borrowers a good time lag before their EMI changes.

Read a Similar Article: Understanding Interest Rate On Housing Loans

Transmission Rate

In RLLR: The change in rate cuts by RBI is transferred to the borrowers in a fast and quick manner.

In MCLR: The transmission of the rate cuts is slow, and it usually takes time before the actual benefit is finally transferred to the borrower.

In a nutshell

If you borrow a Repo Rate Linked Home Loan, you can enjoy more transparency and expect to benefit from repo rate reduction quickly. MCLR, on the other hand, is a more stable option if you estimate the repo rate to rise.


We now hope you understand what MCLR means and what is RLLR interest rate and how these two work. At Kotak Mahindra Bank we provide both Repo Rate Linked Home Loan and MCLR loans at affordable interest rates and quick approvals.


What is the Full form of MCLR?

MCLR full form is Marginal Cost of Fund-Based Lending Rate. MCLR full form in banking means the lowest rate at which banks can lend funds to their borrowers as per RBI regulations. The MCLR full form suggests the meaning of this rate as it is a fund-based rate.

What is the Full form of RLLR?

RLLR full form is Repo Linked Loan or Lending Rate. Repo Linked Lending Rate means is a rate that is linked to RBI’s repo rate. The home loan interest rate depends on the repo rate.

What is MCLR in loan?

What is MCLR in loan is easily understood with the MCLR full form in banking which is Marginal Cost of Fund- based Lending Rate. It helps borrowers benefit from RBI’s rate reduction.

What is MCLR meaning and how it is calculated?

MCLR meaning the lowest rate for lending loans. It helps bring transparency to financial institutions when deciding interest rates.

What is the current MCLR rate by RBI?

MCLR rate means the minimum lending rate. The current MCLR rate by RBI is 6.80%-7.65%.

What is the current RLLR rate?

RLLR rate or Repo Linked Lending Rate means the rate linked to RBI’s repo rate. It is currently 8.40%

Which one is better Mclr or RLLR?

MCLR meaning clearly suggests that it is the lowest rate at which banks can lend money to a borrower. They are always a better option because RLLR rates change and it becomes difficult for the borrower if it increases.

Are all home loans linked to the repo rate?

All major banks have their housing loan linked with repo rate but not all financial institutions are linked to it.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.