RBI Monetary Policy

23rd Nov 2020

RBI Monetary Policy released on 9th Oct 2020. The Reserve Bank of India employs various monetary policy measures to control inflation, regulate supply of money and cost of credit in the economy. Monetary policy instruments that RBI  uses to implement monetary policy are Repo Rate, Reverse Repo Rate, Marginal Standing Facility Rate, Bank Rate, Cash Reserve Ratio, Statutory Liquidity Ratio. We shall see in detail the various monetary instruments. RBI kept the Repo rate unchanged at 4.00% as expected.

Key Monetary Policy Instruments

Policy Repo Rate

Repo rate is the rate at which the Reserve Bank of India lends money to commercial banks in the event of any shortfall of funds. Repo rate is a part of the liquidity adjustment facility used by the RBI to control inflation. During Inflation RBI increases the repo rate so as to discourage the commercial banks from borrowing from RBI. This in turn reduces the money supply in the economy and helps to decrease inflation. In other words, it is the fixed interest rate at which the RBI provides overnight liquidity to commercial banks against the collateral of government or other approved securities.

RBI Repo rate History

 

Reverse Repo Rate

Reverse Repo rate is the rate at which the Reserve Bank of India accepts deposits from commercial banks when RBI itself is facing a financial crisis. generally, the reverse repo rate tend to be lower than the repo rate. In other words, it is the fixed interest rate at which the RBI absorbs liquidity on an overnight basis from commercial banks against the collateral of eligible government securities.

 Marginal Standing Facility Rate:

Marginal Standing Facility is a facility under which the Reserve Bank of India provides additional money to commercial banks against approved securities at times of acute financial crisis faced by the banks. Generally, RBI charges penal rate of interest which is higher than the current repo rate. This acts as an safety valve against unanticipated liquidity shocks to the banking system.

 

Bank Rate:

Bank rate is the rate at which the Reserve Bank of India purchases or rediscounts bills of exchange or other commercial papers. The bank rate is aligned to the MSF rate so any change in MSF rate automatically changes the Bank rate along with policy repo rate changes. The current bank rate stands at 4.25%.

 

CRR:

Cash reserve ratio refers to the average daily balance that every commercial bank must maintain with the Reserve Bank of India. The balance that the commercial banks must maintain is such a percent of its Net demand and time liabilities (NTDL) as notified by RBI. In others words, CRR is the excess cash available with the commercial banks which they can deposit with RBI. The Reserve Bank of India controls the lending capacity of the bank by CRR. It increases CRR if desires to reduce the amount that the commercial banks can lend and vice versa. The current CRR stands at 3%.

SLR:

SLR or the Statutory Liquidity Ration is the share of NTDL that a commercial bank must maintain in safe and liquid assets. Liquid assets include unencumbered government securities, cash and gold. The current SLR stands at 18%

RBI Current Rates (2011- 2020)

23rd Nov 2020 RBI Current Rates

ParticularsCurrent Rates
Policy Repo Rate4.00%.
Reverse Repo Rate3.35%
Marginal Standing Facility Rate4.25%
Bank Rate4.25%
CRR3%
SLR18.00%
Base Rate7.40% - 8.80%
MCLR (Overnight)6.60% - 7.10%
Savings Deposit Rate2.70% - 3.00%
Term Deposit Rate >1 Year 4.90% - 5.50%

10th Feb 2020 RBI Current Rates

ParticularsCurrent Rates
Policy Repo Rate5.15%
Reverse Repo Rate4.90%
Marginal Standing Facility Rate5.40%
Bank Rate5.40%
CRR4%
SLR18.25%
Base Rate8.45% - 9.40%
MCLR (Overnight)7.50% - 7.95%
Savings Deposit Rate3.25% - 3.50%
Term Deposit Rate >1 Year6.10% - 6.40%

14th Dec 2018 RBI Current Rates

ParticularsCurrent Rates
Policy Repo Rate6.50%
Reverse Repo Rate6.25%
Marginal Standing Facility Rate6.75%
Bank Rate6.75%
CRR4%
SLR19.5%
Base Rate8.95%-9.45%
MCLR (Overnight)-
Savings Deposit Rate3.50%- 4%
Term Deposit Rate >1 Year6.25%-7.5%

6th April 2017 RBI Current Rates

The Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) in its 1st Bi-monthly Monetary Policy Statement did not modify the 6.25% existing policy repo rate under liquidity  adjustment facility(LAF) due to the present macroeconomic developments happening in the country. In addition, due to the liquidity adjustment factor the reverse repo rate is at 6% and the Marginal standing facility-MSF stands at 6.5%. But RBI in its press release on bank rates adjusted the bank rate by 25 basis points which stood at 6.75% to 6.50%, this adjustment will come into effect from 6th of April 2017.

The RBI Policy rates are as follows with effect from 06-04-2017:

ParticularsCurrent Rates
Policy Repo Rate6.25%
Reverse Repo Rate6.00%
Marginal Standing Facility Rate6.50%
Bank Rate6.50%
CRR-
SLR-
Base Rate-
MCLR (Overnight)-
Savings Deposit Rate-
Term Deposit Rate >1 Year-

RBI also mentioned that the effects of demonetization which are still visible will fade away by Q4 of 2016-2017. It also indicated that the upward movement of inflation in recent days is a cause of concern and poses risk in the 2nd half of the year.

And the evolving macroeconomic data will continue to influence the policy rates in future.

15th May 2016 RBI Current rates

ParticularsCurrent Rates
Policy Repo Rate6.50%
Reverse Repo Rate6.00%
Marginal Standing Facility Rate7.00%
Bank Rate7.00%
CRR4%
SLR21.25%
Base Rate9.30%-9.70%
MCLR (Overnight)-
Savings Deposit Rate4%
Term Deposit Rate >1 Year7% - 7.50%

27th Dec 2015 RBI Current rates

ParticularsCurrent Rates
Policy Repo Rate6.75%
Reverse Repo Rate5.75%
Marginal Standing Facility Rate7.75%
Bank Rate7.75%
CRR4%
SLR21.5%
Base Rate9.30%-9.70%
MCLR (Overnight)-
Savings Deposit Rate4%
Term Deposit Rate >1 Year7% - 7.90%

26th July 2015 RBI Current rates

ParticularsCurrent Rates
Policy Repo Rate7.25%
Reverse Repo Rate6.25%
Marginal Standing Facility Rate8.25%
Bank Rate8.25%
CRR4%
SLR21.5%
Base Rate9.70%-10%
MCLR (Overnight)-
Savings Deposit Rate4%
Term Deposit Rate >1 Year8% - 8.5%

Dec 2014 RBI Current rates

ParticularsCurrent Rates
Policy Repo Rate8%
Reverse Repo Rate7%
Marginal Standing Facility Rate9%
Bank Rate9%
CRR4%
SLR22%
Base Rate10% to 10.25%
MCLR (Overnight)-
Savings Deposit Rate4%
Term Deposit Rate >1 Year8% to 9%

6th June 2014 RBI Current Rates

ParticularsCurrent Rates
Policy Repo Rate8%
Reverse Repo Rate7%
Marginal Standing Facility Rate9%
Bank Rate9%
CRR4%
SLR23.0%
Base Rate10% – 10.25%
MCLR (Overnight)-
Savings Deposit Rate4.00%
Term Deposit Rate >1 Year8% to 9.05%

10th April 2014 RBI Current rates

ParticularsCurrent Rates
Policy Repo Rate8%
Reverse Repo Rate7%
Marginal Standing Facility Rate9%
Bank Rate9%
CRR4%
SLR23%
Base Rate10% to 10.25%
MCLR (Overnight)-
Savings Deposit Rate4%
Term Deposit Rate >1 Year8%  to 9.25%

9th Feb 2014 RBI Current rates

ParticularsCurrent Rates
Policy Repo Rate8%
Reverse Repo Rate7%
Marginal Standing Facility Rate9%
Bank Rate9%
CRR4%
SLR23.0%
Base Rate10% – 10.25%
MCLR (Overnight)-
Savings Deposit Rate4%
Term Deposit Rate >1 Year8% – 9.10%

12th Sep 2013 RBI Current rates

ParticularsCurrent Rates
Policy Repo Rate7.25%
Reverse Repo Rate6.25%
Marginal Standing Facility Rate10.25%
Bank Rate10.25%
CRR4%
SLR23%
Base Rate9.70%-10.25%
MCLR (Overnight)-
Savings Deposit Rate4%
Term Deposit Rate >1 Year7.50%-9%

24th Oct 2011 RBI Current rates

ParticularsCurrent Rates
Policy Repo Rate8.25%
Reverse Repo Rate7.25%
Marginal Standing Facility Rate9.25%
Bank Rate6.00%
CRR6.0%
SLR24.0%
Base Rate9.50%-10.75%
MCLR (Overnight)-
Savings Deposit Rate4.0%
Term Deposit Rate >1 Year8.50% to 9.50%

25th Jan 2011 RBI Current rates

ParticularsCurrent Rates
Policy Repo Rate6.25%
Reverse Repo Rate5.25%
Marginal Standing Facility Rate-
Bank Rate6.00%
CRR6.0%
SLR24.0%
Base Rate7.60%-8.50%
MCLR (Overnight)-
Savings Deposit Rate3.5%
Term Deposit Rate >1 Year7.00%-8.00%

 

 

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