GK
BANKING AWARENESS AND SEBI
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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if Reserve Bank of India hikes interest rates by 25 basis points in its monetary policy, then a commercial bank would like to increase it’s interest rates on loans by 25 basis points of____?
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Base rate
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Repo rate
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Prime Lending Rate
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Saving account interest rate
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Explanation:
Detailed explanation-1: -These are the benchmark rates that central banks are currently raising to tame inflation. The logic is based on a cascading effect: if central banks charge higher rates to commercial banks, commercial banks in turn increase the rates they offer to households and businesses who wish to borrow.
Detailed explanation-2: -The RBI controls Inflation and Deflation by employing a variety of monetary policy tools such as Repo Rate, Reverse Repo Rate, Bank Rate, Open Market Operations, Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), Liquidity Adjustment Facility (LAF), Market Stabilisation Scheme.
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