Home Banking Awareness What is Repo Rate And Reverse Repo Rate?

What is Repo Rate And Reverse Repo Rate?

What is Repo Rate

You must have heard the terms like repo rate, reverse repo rate and CRR during RBI credit policy. But do you know the meaning of these words?

Today we are telling you its meaning and meaning. Know these words related to the Economic Review Policies of the Reserve Bank of India.

Repo rate

This is the rate at which RBI lends to banks. Banks give loans to customers with this loan. The low repo rate means that many types of loans from the bank will become cheap. Such as home loan, vehicle loan, etc.

Reverse repo rate

As its name suggests, it is the reverse of the repo rate. This is the rate at which banks get interested on money deposited in RBI.

The reverse is used to control the liquidity of cash in the markets.

Whenever there is too much cash in the market, RBI increases the reverse repo rate, so that the bank deposits its money with it to earn more interest.

CRR (Cash Reserve Ratio)

Under the banking regulations act in the country, each bank has to keep a certain portion of its total cash with the Reserve Bank.

This is called the Cash Reserve Ratio (CRR) or Cash Reserve Ratio.

SLR (Statutory Liquidity Ratio)

The rate at which banks keep their money with the government is called SLR.

It is used to control the liquidity of cash. Commercial banks are required to deposit a special amount which is used to complete an emergency transaction.

When the RBI wants to reduce the liquidity of cash without changing the interest rates, it increases the CRR, leaving less money to lend to the banks.

MSF (Marginal Standing Facility)

The RBI first mentioned MSF in the Annual Monetary Policy Review in the financial year 2011-12 and the concept came into force on 9 May 2011.

In this, all scheduled commercial banks can take loans up to 1 percent of their total deposits for one night. Banks get this facility on every working day except Saturday.

Like our Facebook page for regular updates on today gk current affairs and banking awareness. Click here to like this page.


Please enter your comment!
Please enter your name here