RBI action against COVID-19: cuts Repo Rate, CRR and reverse repo
rate
rate
RBI: Reserve Bank of India
The Reserve Bank
of India (RBI) is India’s central bank, which controls the issue and supply of
the Indian rupee. RBI is the regulator of entire Banking in India. RBI plays an
important part in the Development Strategy of the Government of India.
of India (RBI) is India’s central bank, which controls the issue and supply of
the Indian rupee. RBI is the regulator of entire Banking in India. RBI plays an
important part in the Development Strategy of the Government of India.
RBI regulates
commercial banks and non-banking finance companies working in India. It serves
as the leader of the banking system and the money market. It regulates money
supply and credit in the country. The RBI carries out India’s monetary policy
and exercises supervision and control over banks and non-banking finance
companies in India. RBI was set up in 1935 under the Reserve Bank of India Act,
1934.
commercial banks and non-banking finance companies working in India. It serves
as the leader of the banking system and the money market. It regulates money
supply and credit in the country. The RBI carries out India’s monetary policy
and exercises supervision and control over banks and non-banking finance
companies in India. RBI was set up in 1935 under the Reserve Bank of India Act,
1934.
Established: 1st April, 1935
Act: Reserve Bank of India Act, 1934
Currency: Indian rupee
Headquarters: Mumbai, Maharashtra
Governor: Shaktikanta Das
Act: Reserve Bank of India Act, 1934
Currency: Indian rupee
Headquarters: Mumbai, Maharashtra
Governor: Shaktikanta Das
Structure
The central board
of directors is the main committee of the central bank. The Government of India
appoints the directors for a four-year term. The board consists of a governor,
and not more than four deputy governors; four directors to represent the
regional boards; two — usually the Economic Affairs Secretary and the Financial
Services Secretary — from the Ministry of Finance and ten other directors from
various fields.
of directors is the main committee of the central bank. The Government of India
appoints the directors for a four-year term. The board consists of a governor,
and not more than four deputy governors; four directors to represent the
regional boards; two — usually the Economic Affairs Secretary and the Financial
Services Secretary — from the Ministry of Finance and ten other directors from
various fields.
Policy Rate and Reserve Ratio
Policy
Repo Rate:
The rate of interest charged by RBI while they repurchase the
securities is called Repo Rate.
Repo Rate:
The rate of interest charged by RBI while they repurchase the
securities is called Repo Rate.
RBI reduces the
Repo rate by 0.75% and the new Repo rate is 4.40%.
Repo rate by 0.75% and the new Repo rate is 4.40%.
The repo rate has
been reduced by 75 basis points from 5.15 percent to 4.4 percent.
been reduced by 75 basis points from 5.15 percent to 4.4 percent.
Reverse
Repo Rate: Reverse repo rate is the rate at
which the central bank of a country (Reserve Bank of India in case of India)
borrows money from commercial banks within the country. It is a monetary policy
instrument which can be used to control the money supply in the country.
Repo Rate: Reverse repo rate is the rate at
which the central bank of a country (Reserve Bank of India in case of India)
borrows money from commercial banks within the country. It is a monetary policy
instrument which can be used to control the money supply in the country.
RBI reduces
reverse Repo rate by 0.90% and the new reverse Repo rate is 4%.
reverse Repo rate by 0.90% and the new reverse Repo rate is 4%.
The reverse repo
rate reduced by 90 basis points to 4 percent to incentivize banks to lend.
rate reduced by 90 basis points to 4 percent to incentivize banks to lend.
Cash
Reserve Ratio (CRR): Cash Reserve Ratio (CRR) is a
specified minimum fraction of the total deposits of customers, which commercial
banks have to hold as reserves either in cash or as deposits with the central
bank. CRR is set according to the guidelines of the central bank of a country.
Reserve Ratio (CRR): Cash Reserve Ratio (CRR) is a
specified minimum fraction of the total deposits of customers, which commercial
banks have to hold as reserves either in cash or as deposits with the central
bank. CRR is set according to the guidelines of the central bank of a country.
Cash Reserve
Ratio of all banks reduced by 100 basis points to 3 percent of net demand and
time liabilities with effect for one year from March 28. CRR has been cut to
unlock liquidity.
Ratio of all banks reduced by 100 basis points to 3 percent of net demand and
time liabilities with effect for one year from March 28. CRR has been cut to
unlock liquidity.
Statutory
Liquidity Ratio (SLR): Statutory Liquidity Ratio or SLR is
the minimum percentage of deposits that a commercial bank has to maintain in
the form of liquid cash, gold or other securities. It is basically the reserve
requirement that banks are expected to keep before offering credit to
customers.
Liquidity Ratio (SLR): Statutory Liquidity Ratio or SLR is
the minimum percentage of deposits that a commercial bank has to maintain in
the form of liquid cash, gold or other securities. It is basically the reserve
requirement that banks are expected to keep before offering credit to
customers.
|
Rate
|
Old
|
New
|
Cut
|
|
Policy Repo
Rate |
5.15%
|
4.40%
|
0.75%
|
|
Reverse Repo
Rate |
4.90%
|
4.00%
|
0.90%
|
|
Cash Reserve
Ratio (CRR) |
4.00%
|
3.00%
|
1.00%
|
|
Statutory
Liquidity Ratio (SLR) |
18.25%
|
19.50%
|
0.00%
|
The RBI Governor
has assured that the Indian Banking System is safe and sound and there is no
need for the depositors of private and commercial banks to worry about the
safety of their deposits. He said that COVID-19 related volatility impacted the
share prices of the banks in the recent past, resulting in panic withdrawal of
deposits from a few private sector banks. However, this time there is no need
to worry and indulge in such withdrawals.
has assured that the Indian Banking System is safe and sound and there is no
need for the depositors of private and commercial banks to worry about the
safety of their deposits. He said that COVID-19 related volatility impacted the
share prices of the banks in the recent past, resulting in panic withdrawal of
deposits from a few private sector banks. However, this time there is no need
to worry and indulge in such withdrawals.
The RBI
Governor’s address comes just a day after Union finance minister Nirmala
Sitharaman unveiled the new economic package to deal with the coronavirus
impact on the economy and provide relief to the poor and most vulnerable. The
measures worth about Rs 1.70 lakh crore is expected to reduce the impact of the
outbreak in the economy and on people.
Governor’s address comes just a day after Union finance minister Nirmala
Sitharaman unveiled the new economic package to deal with the coronavirus
impact on the economy and provide relief to the poor and most vulnerable. The
measures worth about Rs 1.70 lakh crore is expected to reduce the impact of the
outbreak in the economy and on people.