RBI Policy Rates as updated by Latest orders and Notifications
(Updated by Monetary Policy Committee dt. 06.08.2020)
With the help of policy rate changes, RBI manages inflation by managing money supply in the financial system. If policy rates are reduced, it will make money available easily, and increase in money supply is expected to boost inflation. In reverse situation, when policy rates are increased then money will flush out of financial system and decrease of money supply is expected to reduce inflation.
|Policy Rates||Current Rate||Particulars|
|Repo Rate||4.00%||Repo rate is interest rate at which the RBI lends money to the commercial banks for a short term in the event of scarcity of funds.
|Reverse Repo Rate||3.35%||Reverse Repo rate is the interest rate at which commercial banks in India park their excess money with Reserve Bank of India for a short-term period. RBI manages inflation by managing money supply in market using Repo and reverse repo as a tool.|
|Marginal Standing Facility (MSF)||4.25%||Marginal Standing Facility is a new Liquidity Adjustment Facility (LAF) window created by Reserve Bank of India in its credit policy of May 2011. MSF is the rate at which the banks are able to borrow overnight funds from RBI against the approved government securities in an emergency situation when inter-bank liquidity dries up completely. Under MSF, banks can borrow funds up to 1% of their net demand and time liabilities.
|Bank Rate||4.25%||Bank rate is the rate charged by the central bank for lending funds to commercial banks.Bank rates influence lending rates of commercial banks.|
|Cash Reserve Ratio (CRR)||3.00%||Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If the central bank decides to increase the CRR, the available amount with the banks comes down. The RBI uses the CRR to drain out excessive money from the system.|
|Statutory Liquidity Ratio (SLR)||18.00%||Statutory liquidity ratio (SLR) is the Liquidity/reserve requirement that the commercial banks in India are required to maintain in the form of cash, gold reserves, RBI approved securities before providing credit to the customers.|
|Retail Inflation Rate||3.34%||Inflation Rate in India averaged 5.98 percent from 2012 until 2019, reaching an all time high of 12.17 percent in November of 2013 and a record low of 1.54 percent in June of 2017. In 19-20 retail inflation rate stood at 3.34% with a forecast of 3.62% for 2021|