Scribd
Upload
24 views2 pages

Current Bank Rates and Definitions

The document summarizes various key interest rates related to banks in India. It explains that the bank rate is the interest rate at which the Reserve Bank of India lends to banks and financial institutions. The repo rate is the rate at which the RBI lends money to commercial banks on an overnight basis, while the reverse repo rate is the rate at which banks park excess funds with the RBI. The marginal standing facility rate allows banks to borrow from the RBI using government securities and is 1% higher than the repo rate. The document also defines the cash reserve ratio and statutory liquidity ratio that banks must maintain.

Uploaded by

manjugowdav
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
24 views2 pages

Current Bank Rates and Definitions

The document summarizes various key interest rates related to banks in India. It explains that the bank rate is the interest rate at which the Reserve Bank of India lends to banks and financial institutions. The repo rate is the rate at which the RBI lends money to commercial banks on an overnight basis, while the reverse repo rate is the rate at which banks park excess funds with the RBI. The marginal standing facility rate allows banks to borrow from the RBI using government securities and is 1% higher than the repo rate. The document also defines the cash reserve ratio and statutory liquidity ratio that banks must maintain.

Uploaded by

manjugowdav
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

Bank Related Rates latest

Type

Name Repo Rate Reverse Repo Rate

Rate 6% 8.50% 7.50%

Policy Rate Bank Rate

Marginal Standing 9.50% Facility Rate Reserve Ratios CRR SLR Lending Deposit Rates 6% 24% 9.50% 10.75% 4% 8.50% 9.50%

Base Rate Savings Bank Rate Deposit Rate

Explanation of Bank Related Rates

1) What is Bank Rate? Bank rate is the rate of interest which RBI charges on the loans and advances that it extends to banks and other financial intermediaries. Changes in the bank rate are often used by central banks to control the money supply. 2) What is Repo Rate? The rate at which the RBI lends money to commercial banks is called repo rate, a short term for repurchase agreement. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive. 3) What is Reverse Repo Rate? The rate at which banks park their money with Reserve Bank is called the reverse repo rate. 4) What is Marginal Standing Facility (MSF) Rate? The Marginal Standing Facility (MSF) Scheme is operational on the lines of the existing Liquidity Adjustment Facility Repo Scheme (LAF Repo) i.e. commercial banks can borrow money from RBI. The basic difference between Repo and MSF scheme is that in MSF banks can use the securities under SLR to get loans from RBI and hence MSF rate is 1% more than repo rate. Read more about MSF here

5) What is CRR? Cash reserve ratio is the cash parked by the banks in their specified current account maintained with RBI. 6) What is SLR? Statutory liquidity ratio is in the form of cash (book value), gold (current market value) and balances in unencumbered approved securities.

You might also like