Commerce
Repo Rate
Repo Rate is the rate at which RBI lends money to banks in case of any shortfall in funds arises with the banks.
Impact on Borrower :
(1)Higher the Repo Rate : The loan becomes more expensive
(2)Lower the Repo Rate : The loan becomes cheaper
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Repo Rate
Repo Rate is the rate at which RBI lends money to banks in case of any shortfall in funds arises with the banks.
Impact on Borrower :
(1)Higher the Repo Rate : The loan becomes more expensive
(2)Lower the Repo Rate : The loan becomes cheaper
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Reverse Repo Rate
Reverse Repo Rate is the rate at which comercial banks park their excess funds with the RBI.
Main Objective of this is to control the overall supply of money in the economy.
Higher the Reverse Repo Rate the supply of money decreases in the economy as the bank park their money with RBI.
Lower the Reverse Repo Rate the supply of money increases as banks lend more money to borrowers rather than depositing it with RBI.
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Reverse Repo Rate
Reverse Repo Rate is the rate at which comercial banks park their excess funds with the RBI.
Main Objective of this is to control the overall supply of money in the economy.
Higher the Reverse Repo Rate the supply of money decreases in the economy as the bank park their money with RBI.
Lower the Reverse Repo Rate the supply of money increases as banks lend more money to borrowers rather than depositing it with RBI.
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CRR-Cash Reserve Ratio
CRR is a certain percentage of Total Deposits which the banks have to keep with RBI, means banks cannot lend this amount of money to borrowers. This is done so that if a depositor comes to withdraw money banks should have the amount with them to meet there withdrawl requirement.
Main Objective behind CRR is to meet some sort of liquid cash against depositors.
CRR is fixed by RBI and is changed from time to time.
Example : If there is a total deposit of 1000 with the bank and CRR is 3% then banks have to deposit Rs. 30 with the RBI, means bank cannot lend this much amount for loans
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CRR-Cash Reserve Ratio
CRR is a certain percentage of Total Deposits which the banks have to keep with RBI, means banks cannot lend this amount of money to borrowers. This is done so that if a depositor comes to withdraw money banks should have the amount with them to meet there withdrawl requirement.
Main Objective behind CRR is to meet some sort of liquid cash against depositors.
CRR is fixed by RBI and is changed from time to time.
Example : If there is a total deposit of 1000 with the bank and CRR is 3% then banks have to deposit Rs. 30 with the RBI, means bank cannot lend this much amount for loans
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SLR-Statutory Liquid Ratio
As the name suggest Liquidity, It is that percentage of Total Deposits which Banks have to invest in liquid asset which are as follows:
(i)in cash or,
(ii)in gold or,
(iii)investment in securities issued by Central Government, State Government or any other securities approved by RBI.
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SLR-Statutory Liquid Ratio
As the name suggest Liquidity, It is that percentage of Total Deposits which Banks have to invest in liquid asset which are as follows:
(i)in cash or,
(ii)in gold or,
(iii)investment in securities issued by Central Government, State Government or any other securities approved by RBI.
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