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What is the current Repo Rate in India, as per the announcements made by Reserve Bank of India in June 2018?

What is the current Repo Rate in India, as per the announcements made by Reserve Bank of India in June 2018? Correct Answer 6.25%

The correct answer is 6.25%.

  • The Reserve Bank of India had increased the Repo Rate from 6% p.a. to 6.25% p.a. on 6 June 2018.

Additional Information

  • REPO rate is the rate of interest at which the central bank of India, i.e. Reserve Bank of India (RBI), lends money to the commercial banks. In case of a financial crisis, the commercial banks can lend money from the Reserve Bank of India and the rate of interest at which the money is provided is called the repo rate.
  • Repo rate is used by the central bank to control the money supply in the market. In turn, this helps in controlling inflation and helps regulate the economy.
  • Reverse Repo Rate is when the RBI borrows money from banks when there is excess liquidity in the market. The banks benefit from it by receiving interest for their holdings with the central bank.
  • It encourages the banks to park more funds with the RBI to earn higher returns on excess funds.
  • CRR and SLR are the two ratios. CRR is a cash reserve ratio and SLR is a statutory liquidity ratio. Under CRR a certain percentage of the total bank deposits has to be kept in the current account with RBI which means banks do not have access to that much amount for any economic activity or commercial activity. 

Related Questions

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