Feature Post

UFBU Calls Off Nationwide Bank Strike on 24th and 25th Mar 2025 After Assurances from Finance Ministry and IBA

I n a significant development on March 21, 2025, the United Forum of Bank Unions (UFBU) has decided to call off their two-day nationwide strike, which was originally planned for March 24 and 25. This decision was made after the UFBU received positive reassurances from both the Finance Ministry and the Indian Banks’ Association (IBA) regarding their key demands. The banking unions, under the umbrella body of UFBU, represent employees from nine major unions across the country, including AIBEA, AIBOC, NCBE, AIBOA, and BEFI. The unions had earlier called for the nationwide strike to protest against several ongoing issues that they believe impact the welfare and job security of bank employees. Key Issues Behind the Proposed Strike The strike was initially called by UFBU to address a range of pressing concerns, some of which have been lingering for years. The union's main demands included: Five-Day Workweek for Bank Employees:  One of the most anticipated demands was the implementation o...
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MCLR or RLLR - Which one is more beneficial

 RLLR Repo Linked Lending Rate was introduced by RBI in Oct 2019. From 2019 to 2024, changes in *Marginal Cost of Funds-based Lending Rate* (MCLR) and *Repo Linked Lending Rate* (RLLR) would have influenced borrowers differently based on various factors, including changes in RBI policies, market conditions, and interest rates.


1. MCLR (Marginal Cost of Funds-based Lending Rate):

   - MCLR is tied to the bank’s internal cost of funds. It tends to be more stable compared to RLLR but can change based on the cost of borrowing for the bank, liquidity, and other factors.

   - MCLR rates tend to adjust more gradually, meaning borrowers may have seen more predictable, though slower, changes in their loan interest rates.

   - In a falling interest rate scenario (which India experienced during some periods between 2019–2024), MCLR-linked loans may have passed on rate cuts slower than RLLR-linked loans.


2. RLLR (Repo Linked Lending Rate):

   - RLLR is directly linked to the RBI’s repo rate. Since the repo rate fluctuates based on RBI’s monetary policy decisions, any changes in the repo rate are quickly reflected in RLLR-linked loans.

   - During periods when the RBI reduced the repo rate (like during the pandemic to boost economic activity), borrowers with RLLR-linked loans benefited more quickly from lower interest rates than MCLR borrowers.

   - However, RLLR is more volatile. In periods when the RBI increased the repo rate (such as post-pandemic recovery and inflation control measures), borrowers with RLLR-linked loans saw interest rates rise faster than MCLR borrowers.

# Summary (2019-2024):

-> MCLR would have been beneficial for borrowers seeking stability in interest rates over time.

-> RLLR would have been more beneficial when the RBI was cutting rates, especially in the earlier part of the period (e.g., 2020-2021 during the pandemic), but potentially less so during periods of rate hikes (e.g., late 2022-2024 when inflation concerns led to repo rate increases).

Borrowers who opted for RLLR loans might have experienced quicker benefits from rate cuts, while those with MCLR loans would have seen slower changes in their rates, both upward and downward.

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