What is a Repo Rate

What is a Repo Rate?


Whenever the banks have any shortage of funds they
can borrow it from RBÌ. Repo rate is the rate at which
our banks borrow rupees from RBÌ. A reduction in the
repo rate will help banks to get money at a cheaper rate.
When the repo rate increases borrowing from RBÌ
becomes more expensive.
Repo Rate-7.5%





CRR Rate in Inuia
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBÌ.
Ìf RBÌ decides to increase the percent of this, the available amount with the banks
comes down. RBÌ is using this method (increase of CRR rate), to drain out the
excessive money from the banks.


Statutory Liquidity Ratio
refers to the amount that the commercial banks require to maintain in the form of cash,
or gold or govt. approved securities before providing credit to the customers.

Statutory Liquidity Ratio is determined and maintained by the Reserve Bank of Ìndia in
order to control the expansion of bank credit.




Reverse Repo rate is the rate at which Reserve Bank of Ìndia (RBÌ) borrows money
from banks. Banks are always happy to lend money to RBÌ since their money are in
safe hands with a good interest. An increase in Reverse repo rate can cause the banks
to transfer more funds to RBÌ due to this attractive interest rates. Ìt can cause the
money to be drawn out of the banking system.
Reverse Repo Rate-6.25%