BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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No bank will be able to give loan to any patron at a rate lower than the Bank Rate.
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Bank should give loan to their priority sector customers/borrowers at the rate of 6% only. They cannot charge less or more than this from their priority sector clients.
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Banks are required to invest 6% of their total capital on financial inclusion and inclusive banking operations.
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Banks will be required to give 6% of their total deposits to the Govt. of India for meeting its Balance of Trade requirements.
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Detailed explanation-1: -A bank rate is the interest rate a nation’s central bank charges other domestic banks to borrow funds. Nations change their bank rates to expand or constrict a nation’s money supply in response to economic changes. In the United States, the discount rate has remained unchanged at 0.25% since March 15, 2020.
Detailed explanation-2: -For a Fixed Rate Loan, the rate of interest is fixed either for the entire tenure of the loan or a certain part of the tenure of the loan. In case of a pure fixed loan, the EMI due to the bank remains constant.
Detailed explanation-3: -Can a Bank Change the Interest Rate on a Loan? If the loan is a fixed-interest rate loan, then a bank cannot change the interest rate on the loan for the duration of the loan. If the loan comes with an adjustable rate, then yes, a bank can change the interest rate of the loan.
Detailed explanation-4: -Repo Rate: It is the interest rate at which the central bank of a country lends money to commercial banks. The central bank in India i.e. the Reserve Bank of India (RBI) uses repo rate to regulate liquidity in the economy.