Banking Terms and Banking Rate for RBI Exams
1. Repo Rate: Repo rate is the rate at which our Commercial banks borrow rupees from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive. OR The rate at which the RBI lends money to commercial banks is called Repo rate. Current Repo Rate: 7.25% (As on 25-July-2013)
2. Reverse Repo Rate: rate at which the RBI borrows money from commercial banks. Banks are always happy to lend money to the RBI since their money are in safe hands with a good interest.
Current Reverse Repo Rate: 6.25% (As on 25-July-2013)
3. Bank Rate: The interest rate charges by a central bank to commercial banks for very short term loans.
Current Bank Rate: 10.25% (As on 25-July-2013)
4. Cash Reserve Ratio (CRR): CRR is the amount of funds that the banks have to keep with the RBI. If the central bank decides to increase the CRR, the available amount with the banks comes down. The RBI uses the CRR to drain out excessive money from the system.
Current Cash Reserve ratio (CRR): 4% (As on 25-July-2013)
5. SLR (Statutory Liquidity Ratio): SLR refers to the amount that the commercial banks require to maintain in the form gold or govt. approved securities before providing credit to the customers. Statutory Liquidity Ratio (SLR) is determined and maintained by the Reserve Bank of India (RBI) in order to control the expansion of bank credit.
Current SLR: 23% (from 09-January-2013 no changes.)
Current SLR: 23% (from 09-January-2013 no changes.)
6. Base Rate: The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except in cases allowed by RBI.
Note: The Base Rate system has replaced the Benchmark Prime Lending Rate (BPLR) system with effect from July 1, 2010.