POLICY RATES  Join @BankingAwareness4Exams Repo Rate Ø R | Current Affairs Keeda

POLICY RATES

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Repo Rate

Ø Repo rate is the rate of interest which is levied on Short-Term loans taken by commercial banks from RBI. Whenever the banks have any shortage of funds they can borrow it from RBI.

Reverse Repo Rate

Ø This is exact opposite of Repo rate. Reverse repo rate is the rate at which commercial banks charge on their surplus funds with RBI. RBI uses this tool when it feels there is too much money floating in the banking system.
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CRR Rate

Ø Cash reserve Ratio (CRR) is the amount of cash funds that the banks have to maintain with RBI in cash as reserves.

SLR Rate

Ø SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or government approved securities (Bonds) before providing credit to its customers.

Ø It is determined as the percentage of total Net Demand and Time Liabilities (NDTL).

Bank Rate

Ø Bank rate is the rate of interest which is levied on Long Term loans and Advances taken by commercial banks from RBI.

MSF Rate

Ø MSF (Marginal Standing Facility Rate) is the rate at which banks can borrow overnight from RBI.

Ø This was introduced in the monetary policy of RBI for the year 2011-2012.

Ø Banks can borrow funds through MSF when there is a considerable shortfall of liquidity. This measure has been introduced by RBI to regulate short-term asset liability mismatches more effectively.
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