BANK RATES

According to RBI, Bank Rates as on July 07′ 2012

CRR: 4.75 %

SLR : 24.0 %

Bank Rate : 9.00 %

Repo Rate : 8.00 %

Base Rate : 10.00 % – 10.50 %

Deposit Rate : 8.00 % – 9.25 %

Reverse Repo Rate : 7.00 %

Marginal Standing Facility Rate : 9.00 %

What is Bank rate?
Bank Rate is the rate at which central bank of the country ( Bank Rate in India is decided by 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 Base Rate / Benchmark Prime Lending Rate. Thus any revision in the Bank rate indicates that it is likely that interest rates on your deposits are likely to either go up or go down, and it can also indicate an increase or decrease in your EMI.

What is CRR?
CRR means Cash Reserve Ratio. Banks in India are required to hold a certain proportion of their deposits in the form of cash. However, actually Banks don’t hold these as cash with themselves, but deposit such case with Reserve Bank of India (RBI) / currency chests, which is considered as equivlanet to holding cash with RBI. This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio.

What is SLR Rate?
SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved securities to liabilities (deposits) It regulates the credit growth in India. Some non bankers also wrongly use SLR ratio or SLR Rate instead of Statutory Liquidity Ratio

What is Reverse Repo Rate?
Reverse Repo rate is the rate at which banks park their short-term excess liquidity with the RBI. The banks use this tool when they feel that they are stuck with excess funds and are not able to invest anywhere for reasonable returns. An increase in the reverse repo rate means that the RBI is ready to borrow money from the banks at a higher rate of interest. As a result, banks would prefer to keep more and more surplus funds with RBI.

What is Base Rate?
The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except for DRI advances, loans to bank’s own employees and loan to banks’ depositors against their own deposits. (i.e. cases allowed by RBI).

What is BPLR?
In banking parlance, the BPLR means the Benchmark Prime Lending Rate. BPLR is the interest rate that commercial banks normally charge (or we can say they are expected to charge) their most credit-worthy customers. Although as per Reserve Bank of India rules, Banks are free to fix Benchmark Prime Lending Rate (BPLR) for credit limits over Rs.2 lakh with the approval of their respective Boards yet BPLR has to be declared and made uniformly applicable at all the branches.

What is a Repo Rate?
The rate at which the RBI lends money to commercial banks is called repo rate. It is an instrument of monetary policy. Whenever banks have any shortage of funds they can borrow from the RBI.