Kerala Banking

What is a Reverse Repo Rate?

How will it affect the Bank Loan interest rates

 

Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. Banks are always happy to lend money to RBI since their money are in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive interest rates. It can cause the money to be drawn out of the banking system.
Due to this fine tuning of RBI using its tools of CRR, Bank Rate, Repo Rate and Reverse Repo rate our banks adjust their lending or investment rates for common man.
CRR Rate in India

Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks.

Relation between Inflation and Bank interest Rates

Now a days, you might have heard lot of these terms and usage on inflation and the bank interest rates. We are trying to make it simple for you to understand the relation between inflation and bank interest rates in India.

Bank interest rate depends on many other factors, out of that the major one is inflation. Whenever you see an increase on inflation, there will be an increase of interest rate also.

 

What is Inflation?

Inflation is defined as an increase in the price of bunch of Goods and services that projects the Indian economy. An increase in inflation figures occurs when there is an increase in the average level of prices in Goods and services. Inflation happens when there are less Goods and more buyers, this will result in increase in the price of Goods, since there is more demand and less supply of the goods.

What is a Personal Loan & How to Apply for it?
Car Loans in India
Home Loan Rate in India
Home Loan Terms
Are you Eligible for Home Loan? Find it Yourself
Inflation vs Interest Rates
What is CRR Rate?
What is a Repo Rate?
What is a Reverse Repo Rate?
What is SLR Rate?
What is Inflation?
What is Deflation?
What are the effects of Deflation?
What is Deflationary Spiral?
What are IIP numbers?
IIP data and Stock Markets
When are the IIP numbers published?
Tracking Growth using GDP & IIP data
Personal Loan vs Mortgage Loans
How to Decice on your Home Loan tenure?
What is LTV?
What is Amortising Loan?

 

Related Topics

What is a Personal Loan & How to Apply for it?
Car Loans in India
Home Loan Rate in India
Home Loan Terms
Are you Eligible for Home Loan? Find it Yourself
Inflation vs Interest Rates
What is CRR Rate?
What is a Repo Rate?
What is a Reverse Repo Rate?
What is SLR Rate?
What is Inflation?
What is Deflation?
What are the effects of Deflation?
What is Deflationary Spiral?
What are IIP numbers?
IIP data and Stock Markets
When are the IIP numbers published?
Tracking Growth using GDP & IIP data
Personal Loan vs Mortgage Loans
How to Decice on your Home Loan tenure?
What is LTV?
What is Amortising Loan?

 

 

[Home] [Kerala Banks] [NRI Banking] [Investments] [Loans] [Insurance] [Credit Cards] [Mutual Funds] [Share Market] [Links] [Blog] [Sitemap]

Copyright : Kerala Banking | Keralabanking.com

 

KERALA BANKING