Current Bank rates with their definations

1. Bank Rate:

 

Bank rate is the rate at which central bank of india i.e RBI allows finance to commercial banks.Any upward revision in Bank Rate by central bank is an indication that banks should also increase deposit rates as well as Base Rate .

Therefore, an increase in Bank rate means depositors will get more interest and vice versa.

 

Current Bank rate is: 9.00.

 

Remember Bank Rate is not the same thing as Deposit Rates offered by banks for fixed deposits and recurring deposits.

 

2.SLR(Statutory Liquidity Ratio):

 

Every bank is required to maintain at the close of business every day, a minimum proportion of their Net Demand and Time Liabilities as liquid assets in the form of cash, gold and un-encumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR).  RBI is empowered to increase this ratio up to 40%. 

 

I.e SLR means commercial banks have to deposits minimum amount of deposits with RBI in form of cask or gold etc.An increase in SLR  also restrict the bank’s leverage position to pump more money into the economy.

 

Current SLR is: 23.0

 

3.Repo Rate:

 

Its a rate at which RBI lends money to commercial Banks against securities. In increase in Repo Rate means borrowing from RBI become more expensive.

 

Current Repo Rate is: 8.0

 

4. Reverse Repo Rate:

Its a rate at which RBI borrows money from commercial banks. This condition occurs when deposits with bank stuck and not in position to invest anywhere

An increase in the reverse repo rate  means that the RBI is ready to borrow money from the banks at a higher rate  of interest.

 

Current Reverse Repo Rate is: 7.0

 

5. CRR(Cash Reserve Ratio):

Banks in India are required to hold a certain proportion of their deposits in the form of  cash. Banks do not hold deposits with itself but deposits money with RBI. This money will be helpful in case of Bankrupt.

 

Current CRR is: 4.0

 

6. MSF(Marginal Standing Facility):

MSF is the rate at which commercial banks could borrow funds overnight from RBI against Government securities .

 

Banks can borrow money through MSF in case of emergency.

 

Current CRR is: 9.0