What is/are the purpose/purposes of the 'Marginal Cost of Funds based Lending Rate (MCLR)' announced by RBI? 1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances. 2. These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks. Select the correct answer using the code given below.

The 'Marginal Cost of Funds based Lending Rate (MCLR)' was introduced by the Reserve Bank of India (RBI) in April 2016 to improve the transparency and fairness in the methodology followed by banks for determining interest rates on advances. Let's examine the purposes: 1. **These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances.** This statement is correct. MCLR was designed to make the lending rate calculation more transparent and directly linked to the marginal cost of funds for banks, replacing the earlier Base Rate system which was opaque. 2. **These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.** This statement is correct. By linking lending rates to the marginal cost of funds and external benchmarks (which succeeded MCLR), the RBI aimed to ensure that changes in policy rates are transmitted effectively to lending rates, benefiting borrowers with faster rate cuts and ensuring banks maintain a viable spread. Both statements accurately describe the aims of MCLR.