Bank rate hiked to 10.25%; MSF rate up by 200 bps

Bank rate hiked to 10.25%; MSF rate up by 200 bps.

In a bid to restore stability in the foreign exchange market, the Reserve Bank of India (RBI) has hiked the marginal standing facility (MSF) rate to 10.25 per cent, a rise of 200 basis points from the current level of 8.25 per cent.

RBI-Reserve Bank of IndiaThis decision by the RBI late Monday evening, which comes on a day finance minister P Chidambaram met Prime Minister Manmohan Singh and RBI governor D Subbarao to take stock of ways to stabilise the falling rupee, mean that banks will have to pay more interest on their overnight fund requirments.

The RBI will conduct open market sales of government securities of Rs 12,000 crore on July 18, 2013.

The RBI has also increased bank rate — the rate of interest which RBI charges on the loans and advances that it extends to banks — to10.25 per cent from 8.25 per cent from with immediate effect.

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