The repo rate has been reduced by RBI, read report
Reverse Repo Rate: The interest that banks receive when depositing their deposits or money with RBI is called reverse repo rate. The reverse repo rate works to control cash in the market. The RBI raises the repo rate on higher liquidity in the market.
SLR: On the interest rate the bank keeps its money with the government, it is called SLR. This is used to control cash. Commercial banks have to deposit certain amount, which is used to cater to an emergency situation.
CRR: According to the banking rules, all banks have to deposit a certain amount of their total cash with the Reserve Bank. This is called CRR.
MSF: RBI started this year in 2011. Under the MSF, commercial banks can borrow up to one percent of their total deposits for one night.
The decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of (+/-) 2 per cent, while supporting growth," the RBI said in a statement.
Banks take cue from RBI’s monetary policy stance in hiking or cutting lending rates. For instance, if the Reserve Bank lowers repo rate, banks are expected to pass on the benefit to retail customers.
With back-to-back rate cuts, home, auto or personal loan EMIs (equated monthly inslallments) are likely to go down.
The RBI’s decision comes a week before the general election kicks off on April 11, in which Prime Minister Narendra Modi will seek a second term in office.
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