Definition
Repo-Linked Lending Rate (RLLR)
RLLR is a lending rate tied directly to the RBI's repo rate, so changes in the repo rate quickly flow through to borrowers.
The Repo-Linked Lending Rate (RLLR) is an external benchmark lending rate equal to the RBI's repo rate plus a spread set by the bank. Because it is linked to an external, transparent benchmark, RBI rate cuts or hikes are passed on to borrowers faster than under the internal MCLR system.
Most new retail floating-rate loans — home, auto and others — are now RLLR-linked. When the RBI changes the repo rate, your loan's rate resets within a defined period, adjusting your EMI or tenure.
The spread over the repo rate reflects the bank's margin and your credit profile, so borrowers with strong credit scores typically secure a lower spread and thus a cheaper loan.
Related terms
- Fixed vs Floating Interest RateA fixed-rate loan keeps the same interest rate throughout, while a floating-rate loan's rate moves with a benchmark over time.
- MCLR (Marginal Cost of Funds Lending Rate)MCLR is an internal benchmark that determines the minimum interest rate at which a bank can lend, based on its cost of funds.
- Credit Score (CIBIL)A credit score, popularly called a CIBIL score in India, is a 300-900 number that reflects how reliably you repay loans and credit-card dues.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.