Read the passage given below and then answer the questions given below the passage. Some words may be highlighted for your attention. Read carefully.
The RBI continues to remain unable to influence the effective lending rates in the economy. In February, in its latest statement of intent to resolve poor monetary transmission, the RBI said it would instruct banks to switch base rate customers to the marginal cost of funds-based lending rate (MCLR) system from April 1, 2018. In April 2016, it had introduced the MCLR regime, scrapping the base rate regime, in place since 2010. “Since MCLR is more sensitive to policy rate signals, it has been decided to harmonise the methodology of determining benchmark rates by linking the Base Rate to the MCLR,” it had said. This was supposed to push banks to lower lending rates. Currently, under the base rate system, the lending rate at State Bank of India is 8.7%. The one-year MCLR rate is just 8.25%. This difference of 45 basis points could make a significant difference in borrowing costs, especially for smaller firms and retail consumers relying on equated monthly instalments. In the RBI’s assessment, a large proportion of outstanding loans and advances continues to be linked to the base rate system. This perhaps triggered the February statement.
Which of the following is not true with regard to the passage?
A. The difference in basis point could make an important change in borrowing costs.
B. Policy rate signals are more sensitive to MCLR.
C. MCLR was adopted in place of base rate customers.