POLICY RATES

Repo Rate 

Repo rate is the rate of interest which is levied on Short-Term loans taken by commercial banks from RBI. Whenever the banks have any shortage of funds they can borrow it from RBI.

Reverse Repo Rate 

This is exact opposite of Repo rate. Reverse repo rate is the rate at which commercial banks charge on their surplus funds with RBI. RBI uses this tool when it feels there is too much money floating in the banking system. 

SLR Rate 

SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or government approved securities (Bonds) before providing credit to its customers. 

It is determined as the percentage of total Net Demand and Time Liabilities (NDTL). 

Bank Rate

It is defined in Sec 49 of RBI Act 1934 as the ‘standard rate at which RBI is prepared to buy or rediscount bills of exchange or other commercial papers eligible for purchase under this act’.

Cash Reserve Ratio (CRR)

CRR refers to the ratio of bank’s cash reserve balances with RBI with reference to the bank’s net demand and time liabilities to ensure the liquidity and solvency of the scheduled banks.