Today Reserve Bank Of India reduced repo rates by 0.25% to 7.50% from 7.75%.
What is CRR,Repo Rate & Reverse Repo Rate:
CRR – Cash Reserve Ratio: As name indicates Banks need to keep certain ratio of deposits with Reserve Bank Of India which is called as Cash Reserve Ratio.Current CRR is 4% which means that if there is deposit of Rs.100,bank will able to utilize Rs.96/- for lending purpose.This is the most effective tool for RBI to increase / decrease liquidity which in turn affects the inflation.
Repo Rate:The rate at which RBI lends money to banks or other financial institutions.
Reverse Repo Rate: Its opposite to Repo rate where RBI borrow money from banks & reverse repo rates are typically 1% lower than that of Repo rates.
CRR,Repo rates directly affects the loan rates & deposit rates offered by banks & RBI need to make a balance of Growth & inflation while considering about the same.
Current interest rates:
Bank Rate (Repo Rate) & Inflation comparison with other Asian countries:
We will take a view Bank rates & current CPI inflation rates with other few Asian Countries:
|
Name Of Country |
Bank Rate |
CPI Inflation Rate |
|
India – |
7.50% |
6.84% |
|
China |
6% |
3.20% |
|
Japan |
0.1% |
-0.30% |
|
Pakistan |
9.50% | 7.40% |
|
SriLanka |
7.50% | 9.80% |
|
Nepal |
9.95% | 3% |
|
Singapore |
0.04% | 3.60% |
|
Saudi Arabia |
2% | 3.90% |
|
Bangladesh |
7.25% |
7.87% |
