Wednesday, March 4, 2009

RBI cuts repo and reverse repo rates

The Reserve Bank of India lowered its Repo Rate and Reverse Repo Rate by 50 basis points to 5% and 3.5% respectively, with immediate effect. The Repo Rate is the rate at which RBI lends money to banks and the Reverse Repo Rate is the rate at which banks park funds with RBI.

This move will help RBI to maintain enough money in the economy as it will allow banks to reduce their interest rates on various loans, thereby making credit available easily to the population, at lower interest rates.

The inflation rate, which is already low, would come down further with the rate cut. Meanwhile, the central bank has asked banks to monitor their loans and assets quality as concerns grow over non-performing assets in the banking system.

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Non Performing Assets said...

Thank you very much for this important information. This is not going to help common people. Banks will not reduce their lending rate instead will reduce their deposit rates. General people will bear more, getting less return in deposit and paying more in loans. RBI should not further reduce the lending rates, as it is in favor of only banks not general people.

Puneet Parakh said...

hey dude!
Good Blog..I also have similar blog:

Sujith C said...

> Non Performing Assets
many banks did reduce home loan rates after that..

> Puneet Parakh
thanks man.. i visited ur blog. great stuff u got there.

Justin said...

Even though The RBI cuts repo & reverse repo rates but i think would not be helpful for public because banks will not reduce their lending rate. I am completely agree with the first comment. Quidco vs TopCashBack

Disability Insurance for Doctors said...

I loved your article.Really looking forward to read more.


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