Скачать или смотреть Repo Rate & Reverse Repo Rate (Policy Matters S01E56)

Repo rate is the rate at which RBI lends money to banks. The higher the repo rate, the higher is the cost of borrowing from banks. With lower repo rates, loans are cheaper.

Now, let’s understand the loan cycle. If banks have borrowed money from RBI, then what is the rate at which the bank has borrowed. If the bank has borrowed at a high rate from RBI, you will get a loan at a higher interest rate. If banks have borrowed at a low interest rate from RBI, then the home buyers will also get loans at lower interest rates.

Normally in credit policy, repo rate and reverse repo rate are changed.

Now let’s discuss the reverse repo rate.

RBI also takes money from commercial banks. If banks have excess funds, they deposit/ lend the surplus fund to RBI and get interested in the deposited amount from RBI. So, the reverse repo rate is the rate of interest that RBI gives to banks. Banks also earn money through interest given by RBI. The reverse repo rate is used to control the money supply in the market. Like repo rate, reverse repo rate also changes but reverse repo rate is always less than the repo rate.

The third important thing is Cash Reserve Ratio or CRR.

Banks must keep one part of their funds with RBI. So, CRR is the amount that banks keep with RBI. CRR is the specified minimum fraction of the total deposits of customers. CRR leads to an increase in interest rates on loans provided by banks. Reduction in CRR takes money out of the system, causing a decrease in the money supply. When the money supply decreases, inflation comes down.

For more information

Latest RBI Guidelines for Home Loans 2022

https://www.magicbricks.com/blog/rbi-...