RBI Monetary Policy,RBI Functions and RBI Rates

Reserve Bank of India (RBI) is the central banking institution of India. RBI control the monetary policy Rupee as a sole controller. RBI also controls the liquidity (flow of money) in Indian Market by Changing its Policy rates and Reserve ratios. RBI have three rates: Bank Rate, CRR,SLR. Different RBI Rates: (As of March 4, 2015)

What are Repo rate and Reverse Repo rate? Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks. When the repo rate increases borrowing from RBI becomes more expensive. Therefore, we can say that in case, RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate. Reverse Repo rate is the rate at which banks park their short-term excess liquidity with the RBI. The RBI uses this tool when it feels there is too much money floating in the banking system. An increase in the reverse repo rate means that the RBI will borrow money from the banks at a higher rate of interest. As a result, banks would prefer to keep their money with the RBI. As of March 4, 2015:

  • Current Repo Rate: 7.5%
  • Current Reserve Repo Rate: 6.5%

Acknowledgment: Mukul Sharma of IAS Mentor.

52 thoughts on “RBI Monetary Policy,RBI Functions and RBI Rates

  1. sir mujhe ye sab hindi language me chahiye

  2. thanx for giving so much useful material at ease

  3. Thanks for sharing …

  4. chaitanya dable says:

    wht is current ppf rate

  5. excellent explanation

  6. crr means cash reserve ratio 

    ppf rate is 8.9%

  7. Debashridutta says:

    kindly note that RBI is the apex body and it cannot borrow money from the banks as has been explained in the last but second sentence….

    • RBI borrows money from banks to suck the surplus/excess liquidity from banking institution with a certain interest rate is called reverse repo rate. so RBI can borrow…

    • RBI plays the different rates to control the money floating in the market………..
      for these it increases the rates of Reverse Repo rate to gain interests to schedule n nationalize banks……..

  8. Difference between bank rate and repo rate ?

  9. Please update current rate of RBI

  10. please update the rates yar

  11. Vishnu Anand says:

    ask any thing which you want about banking sector..

  12. who and how currency value is determined

    • it is mainly decided by RBI and central govt.
      on the basis of market……
      any more references please suggest…..

  13. plzz update 20thjuly questions asked in RBI ?

  14. what is MSF?

  15. What is difference between Bank Rate and Base Rate?

    • Bank rate means the rate at which RBI rediscount bills of exchange to bank.
      Base rate means the minimum rate at which bank lends money to his customer

  16. what is difference between Bank rate and MSF

  17. Ask any Query about banking sector

  18. what is d current msf rate

  19. The gap between the repo rate and reverse repo rate is known as ———

  20. repo rate is 7.25%

  21. philemon babu says:

    super information sir…….thank you so…..much…………!

  22. thanks a lot

  23. deepikatiwari says:

    to increase the liquidity in market RBI increase the repo rate or decrease the repo rate.

  24. pls send me banking awareness questions to my mail…. i have been writing bank exam from the past 5 yearsbut i am not getting succeed….. pls help me in this regard, my age limit will also gets completes with this IBPS CLERK EXAM so kindly pls give me some suggestions to overcome my problem. This is my last attempt

  25. very very thanks to this team , who maintained all these subjects, thank u so much

  26. is it bank rate nd base rate will be same r not?……

  27. shweta suryawanshi says:

    from which banks RBI borrows money?

  28. Thanks for essential ga in easy way


    REPO RATE–Vo dar jis par RBI commercial banko ko loan(Rin) deta hai—(8%)

    REVERSE REPO RATE– VO dar jis par RBI commercial bankon se loan(Rin) Leta hai.—(7%)

    CRR–jama raashi ka vah hissaa jo banko ko Rbi ke paas rakhna hai.—–(4%)

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