Which of the following is/are key policy rates used by RBI to influence interest rates?begin{enumerate}item Bank Rate and Repo Rateitem Reverse Repo Rateitem CRR and SLRend{enumerate}

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which of the following is/are key policy rates used by RBI to influence interest rates?

A	Only 1
B	Only 2
C	All the above
D	Only 3

Explanation:

Detailed explanation-1: -The central bank in India i.e. the Reserve Bank of India (RBI) uses repo rate to regulate liquidity in the economy. In banking, repo rate is related to ‘repurchase option’ or ‘repurchase agreement’.

Detailed explanation-2: -CRR is a reserve maintained by banks with the RBI. It is a percentage of the banks’ deposits maintained in cash form. SLR is an obligatory reserve that commercial banks must maintain themselves. It is a percentage of commercial banks’ net demand and time liabilities, maintained as approved securities.

Detailed explanation-3: -On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today (February 8, 2023) decided to: Increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.50 per cent with immediate effect.

Detailed explanation-4: -The amount of interest payable at the prescribed rate (presently 3.50%) is to be worked out on the eligible portion of CRR balances for a period of 14 days.

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