2. CRR Rate in India
Cash reserve Ratio (CRR) is the amount of funds that the
banks have to keep with RBI. If RBI decides to increase
the percent of this, the available amount with the banks
comes down. RBI is using this method (increase of CRR
rate), to drain out the excessive money from the banks.
S
3. S What is Bank rate?
Bank Rate is the rate at which central bank of the
country (in India it is RBI) allows finance to
commercial banks. Bank Rate is a tool, which
central bank uses for short-term purposes. Any
upward revision in Bank Rate by central bank is an
indication that banks should also increase deposit
rates as well as Prime Lending Rate. This any
revision in the Bank rate indicates could mean
more or less interest on your deposits and also an
increase or decrease in your EMI.
4. What is a Repo Rate?
Whenever the banks have any shortage of funds they can
borrow it from RBI. Repo rate is the rate at which our
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.
5. REVERSE REPO RATE
Reverse Repo rate is the rate at which Reserve Bank of
India (RBI) borrows money from banks. Banks are
always happy to lend money to RBI since their money
are in safe hands with a good interest. An increase in
Reverse repo rate can cause the banks to transfer more
funds to RBI due to this attractive interest rates. It can
cause the money to be drawn out of the banking
system. Due to this fine tuning of RBI using its tools of
CRR, Bank Rate, Repo Rate and Reverse Repo rate
our banks adjust their lending or investment rates for
common man.
6. Statutory Liquidity Ratio
SLR (Statutory Liquidity Ratio) is the amount a
commercial bank needs to maintain in the form of
cash, or gold or govt. approved securities (Bonds)
before providing credit to its customers. SLR rate
is determined and maintained by the RBI (Reserve
Bank of India) in order to control the expansion of
bank credit.
7. What are Mutual Funds?
What exactly is a Mutual fund ? I am sure that you
have heard about Mutual Fund investments, buy
what exactly is a Mutual fund investment? As simple,
Mutual fund is like an insurance policy. There are
accumulation and collection of many different types
of shares. It is when investors together want to buy
securites as a group, this fund can be called a mutual
fund. Each and every investor of this group has a
proportional stake in the shares based on the
amount he has contributed
8. Bank Rate6.00%
Cash Reserve Ratio (CRR)6.00%
Statutory Liquidity Ratio (SLR)25%
Reverse Repo Rate 5.25%
Repo Rate 6.25%
THIS IS UPDATED ON 4NOV.2010
