BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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rate of interest charged by banks from borrowers
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rate of interest on bank deposits
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rate of interest charged by RBI on its loans to banks
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rate of interest on inter-bank loans
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Detailed explanation-1: -Reserve Bank of India (RBI), the central banking institution of India controls the monetary policy of the Indian currency. The key repo rate has been hiked on 7 December 2022 by the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) by 35 basis point to 6.25%.
Detailed explanation-2: -The Bank Rate acts as the penal rate charged on banks for shortfalls in meeting their reserve requirements (cash reserve ratio and statutory liquidity ratio). The Bank Rate is published under Section 49 of the RBI Act, 1934.
Detailed explanation-3: -The interest rate charged by RBI on such borrowings is called the MSF rate or marginal standing facility rate. RBI has introduced this provision to help scheduled banks when inter-bank liquidity completely dries up and they are in urgent need of money.
Detailed explanation-4: -Current reverse repo rate is at 3.35%. Repo rate refers to the rate at which commercial banks borrow money by selling their securities to the Central Bank of our country i.e. Reserve Bank of India (RBI) to maintain liquidity, in case of shortage of funds or due to some statutory measures.