New Repo rate, Reverse Repo rate, Bank rate
The
Reserve Bank of India cut its key interest rate by
25 basis points on 3
rd of May 2013 for the third time since January.
Now repo rate stands at 7.25 percent.Consequently, reverse repo rate stands at
6.25 percent.
These rates are lowest since May 2011 while RBI retaining
the CRR for banks unchanged at 4 percent.
New Rates:
1) RBI cuts repo rate by 25 basis points to 7.25 percent.
2) New Reverse repo rate falls to 6.25 percent from 6.50
percent.
3) Marginal Standing Facility rate stands at 8.25 percent.
4) Bank rate changed to 8.25 percent with immediate effect.
What is repo rate?
REPO RATE: - is the rate of interest which is charged by RBI
on its advances to commercial banks for short-term. Repo rate is also called
(repurchase agreement or repurchase option).
What is reverse repo rate?
REVERSE REPO RATE: - is the interest rate earned by the bank
for lending money to the RBI in exchange of govt. securities or "lender
buys securities with agreement to sell them back at a predetermined rate".
What is Cash reserve ratio?
CASH RESERVE RATIO: - specifies the percentage of their
total deposits the commercial bank must keep with central bank or RBI. Higher
the CRR lower will be the capacity of bank to create credit.
What is bank rate?
BANK RATE: - is the rate of interest which is charged by RBI
on its advances to commercial banks for long-term . When reserve bank desires
to restrict expansion of credit it raises the bank rate there by making the
credit costlier to commercial bank.
