BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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free to fluctuate according to the forces of demand and supply
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set by the RBI
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set by the RBI is directed by the Union Ministry of Finance
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set by the RBI as advised by the Indian Banks Association
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Detailed explanation-1: -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-2: -Bank Rates in India is determined by the RBI. It is usually higher than a Repo Rate on account of its ability to regulate liquidity.
Detailed explanation-3: -Our Monetary Policy Committee (MPC) sets Bank Rate. It’s part of the Monetary Policy action we take to meet the target that the Government sets us to keep inflation low and stable. Bank Rate determines the interest rate we pay to commercial banks that hold money with us.
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.
Detailed explanation-5: -Definition. Bank Rate is the rate or discount at which RBI grants loans or advances to commercial banks. Hence, it is also called Discount Rate. The money that commercial banks repay to RBI is the interest amount on the loans.