Resources » Finance » Banks

Reserve Bank Hikes Interest Rates


Posted Date: 25-Jan-2011  Last Updated:   Category: Banks    
Author: Member Level: Gold    Points: 10 (Rs 5)


Reserve Bank of India, after the Q3 review, hiked repo and reverse repo rates to 6.5% and 5.5% respectively. RBI measure is aimed at curbing inflation. This will make loans dearly as banks are likely to increase interest rates for their loans.



Reserve Bank Hikes Repo / Reverse Repo Rates



Reserve Bank of India, after reviewing the Q3 performance of the economy, decided to increase repo rate to 6.5% and reverse rep rate to 5.5%. Prior to this, these rates were 6.25% and 5.25% respectively. Reserve Bank expects the GDP to grow by 8.5% in the current financial year.

RBI measure is aimed at taming inflation, which was 8.43% in December. The central bank wants to bring down the inflation rate to below 7% by March.

What is Repo Rate?
When banks face shortage of funds, they borrow money from the RBI. The interest that RBI charges on this money is called Repo Rate.

What is Reverse Repo?
During slack season, banks can deposit their surplus funds with the RBI. Reserve Bank pays an interest on this money. This rate is the reverse repo rate.

Impact
Banks will hike interest rates on various loans, and this means increased interest costs for the common man. Housing loans, Vehicle loans, and Consumer loans will become dearly.


Read related articles: Reserve Bank    

Did you like this resource? Share it with your friends and show your love!




Responses to "Reserve Bank Hikes Interest Rates"

No responses found. Be the first to respond...

Feedbacks      

Post Comment:




  • Do not include your name, "with regards" etc in the comment. Write detailed comment, relevant to the topic.
  • No HTML formatting and links to other web sites are allowed.
  • This is a strictly moderated site. Absolutely no spam allowed.
  • Name:   Sign In to fill automatically.
    Email: (Will not be published, but required to validate comment)



    Type the numbers and letters shown on the left.


    Submit Article     Return to Article Index

    Online members

    More...
    Awards & Gifts
    Active Members
    Today
      Last 7 Daysmore...

      Copyright © SpiderWorks Technologies Pvt Ltd., Kochi, India. All Rights Reserved.