Reserve bank of India (RBI)- RBI Monetary policy rate, RBI Function and RBI Rates

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Reserve bank of India (RBI) is the central bank of India. RBI is controlled all of the monetary policy like Repo rate, Reverse Repo Rate, Bank Rate, Cash reserve ratio, Base rate, Statutory Liquidity ratio and Marginal Standing Facility. Reserve bank of India (RBI) is also control flow of money in Indian market.

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In below this article we are giving latest update related to RBI Monetary policy rate:

Name of the Monetary policy Changes
1.Bank Rate 8.5%
2.Cash Reserve Ratio (CRR) 4%
3.Statutory Liquidity Ratio (SLR) 21.5%
4.Base Rate
5.Marginal Standing Facility (MSF) 8.5%
6.Repo Rate 7.5%
7.Reverse Repo Rate 6.5%

RBI Monetary police knowledge in Brief:

List of RBI Monetary Policy:

  • Bank Rate
  • Base Rate
  • Repo Rate
  • Cash reserve Ratio
  • Reverse Repo Rate
  • Statutory Liquidity ratio (SLR)
  • Marginal Standing facility (MSF)

1.Bank rate:

What is bank Rate?-

  • Definition of bank rate is at which Reserve bank of India Lends money to other finance institution or other bank.
  • Bank rate is most important tool for Central bank of India, Which reserve bank of India (RBI) uses for Short Term motive.
  • In other way you can also say, any upward revision in bank rate by RBI is indication that common bank is also increase deposit rate as well as base rate.
  • The bank rate can also indicate an increase and decrease in based your EMI.

Are you confusing? Leave it check simple definition of Bank Rate in below:

Bank Rate:

  • Bank Rate is at which Central bank of India (RBI) lends finance to other bank or any financial institution.
  • If any case bank rate increases then long term interest rate also tend to move-up and vice-versa.

2.Base Rate:

What is base Rate?-

  • Base rate at which financial institution, base rate is the minimum rate below which bank cannot lend money to central bank of India, Expect in case permitted by Central bank of India.
  • Bank rate is the Minimum rate of interest that bank is permitted to charge from its customer.

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3.Repo Rate:

What is Repo rate?-

  • The Rate is at which the Central bank of India lends money to financial institution or other commercial bank with securities.
  • Repo Rate is also known as repurchase agreement.
  • Repo rate is basically used by monetary authorities to control inflation.
  • The main Effect of Repo rate increase and decrease, when repo rate goes up borrowing from Central bank become more expensive.
  • So here we can see that in case Increasing repo rate RBI, it more expensive for the bank borrow money and decreases repo rate, its exactly reverse way cheaper for banks to borrow money.

4.Reverse Repo rate:

What is Reverse Repo rate?:

  • Reverse Repo rate is exactly opposite of repo rate
  • Reverse Repo rate is at which the reserve bank of India (RBI) borrows fund from any financial institution or other commercial bank for short time duration.
  • The Commercial bank deposits their short term excess fund with the RBI and also earns it.
  • The main function of Reverse repo rate is used by the RBI to absorb liquidity from the economy.
  • Reverse repo rate is increasing, which it means that bank earn higher rate interest from Central bank.

5. Cash Reserve Ratio:

What is Cash Reserve Ratio?:

  • Cash Reserve Ratio is shortly known as CRR.
  • The Cash Reserve Ratio is defined as a, Bank in India are required to hold certain proportion of their deposits in the form of cash.
  • The simple definition of Cash reserve ratio is the amount of funds bank must keep with the central bank.
  • Example like, Now the CRR is at 4 percent, which means for every 100 rupee, the commercial bank keeps 4 rupee with the central bank in cash.
  • The CRR is indicate the policy stance of the bank and also used as a tools to manage liquidity.

6.Statutory Liquidity ratio (SLR):

What is SLR?:

  • SLR full form is Statutory Liquidity Ratio.
  • The minimum Percentage of deposit that the bank has to maintain in form of gold, cash and other securities.
  • You can say also, the ratio of cash and some other approved securities to liabilities.
  • The SLR is also maintained the credit growth of India.

7.Marginal Standing Facility (MSF):

What is MSF?:

  • MSF Stands for Marginal Standing Facility.
  • MSF is the rate at which Central bank lends money overnight to scheduled banks against approved government securities.

RBI Function download here pdf –RBI Function Pdf

Important point about – Reserve bank of India

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Banking Awareness study material – Reserve bank of India:

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Important Point for Reserve bank of India:

  1. What is the name of Central bank of India – Reserve bank of India(RBI)
  2. RBI was established on April 1, 1935 with under RBI act 1934
  3. Reserve bank of India was set up on the recommendation of the Hilton Young Commission.
  4. Total Number of Central bank of India –only one
  5. The Hilton Young Commission agreed its report in 1926.
  6. Reserve bank of India was constructed as with fully paid-up Capital of Rs.5 Cr.
  7. Reserve bank of India was nationalized in year of 1949.
  8. RBI is not Include Commercial bank.
  9.  Headquarter of RBI was at Calcutta now moved in Mumbai after 1937.
  10. There are total 26 regional office of RBI
  11. Sir Osborne Smith was first governor of Reserve bank of India.
  12. CD deshmukh was the first Indian governor of RBI (1943-1949)
  13. Name of the RBI governor which was also prime minister of India – Dr. Manmohan Singh
  14. Name of the first female governor of Reserve bank of India –KJ Udeshi
  15. Reserve bank of India (RBI) is the statuary body.
  16. The RBI governor is also known as Executive head.
  17. The RBI governor is associated by four deputy governor
  18. Reserve bank of India (RB) is also member bank of Asian Clearing Union
  19. RBI is also member of IMF
  20. RBI is solely authority in India which is responsible for creating notes for all domination.
  21. Emblem of RBI-Panther and palm Tree
  22. RBI can print 17 languages in Bank Notes.

Here we are giving List of RBI Governor:

List of RBI Governor –(1934-2013):

Name of the Governor Time period
1.Sir Osborne Smith 1935-1937
2.Sir james Braid Taylor 1937-1943
3.C.D.Dishmukh 1943-1949
4.Sir Benegal Rama Rau 1949-1957
5.K.G.Ambegaonker
6.H.V.R.Iyengar 1957-1962
7.P.C.Bhattachraya 1962-1967
8.L.K.jha 1967-1970
9.B.N.Adarkar  
10.S.Jagannathan 1970-1975
11.N.C.Sein Gupta  
12. K.R.Puri 1975-1977
13.M.Narishman 1977-1982
14.Dr.I.J.patel  
15.Dr.Manmohan Singh 1982-1985
16.A.Ghosh  
17.R.N.Malothra 1985-1990
18.S.Venkitaramanan 1990-1992
19.Dr.C.Rangarajan 1992-1997
20. Dr.Bimal jalan 1997-2003
21.Dr.Y.V.reddy 2003-2008
22.Dr.D.Subbarao 2008-2013
23.Dr.Raghuram G.Rajan 2013-till now

List of female Governor of RBI:

Name of the female Deputy governor Time period
K J Udeshi 2003-2005
Shyamala Gopinath 2004-2009 and 2009-2011
Smt Usha Thoart 2005-2010