RBI April Monetary Policy Review (2016-17)
Reserve Bank of India (RBI),India’s central banking institution, which controls the monetary policy of the Indian rupee announced its First Bi- monthly Policy Rates for the year 2016-17 in Mumbai.
Basic definitions of the Policy Rates are as follows:
- Repo Rate – It is the rate at which RBI lends money to commercial banks.
- Reverse Repo rate – It is the rate at which RBI borrows money from commercial banks.
- Cash Reserve Ratio (CRR) – The share of net demand and time liabilities (deposits) that banks must maintain as cash balance with the Reserve Bank.
- Statutory Liquidity Ratio (SLR) – The share of net demand and time liabilities (deposits) that banks must maintain in safe and liquid assets, such as, government securities, cash and gold.
- Bank Rate – It is the rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers for long term.
- Marginal Standing Facility Rate (MSF) – The rate at which the scheduled banks can borrow funds from the RBI overnight, against the approved government securities is termed as MSF.
According to RBI the following information will be received:
- 2nd Bi-monthly review will be on – June 7, 2016
- 3rd Bi-monthly review will be on – Aug 9, 2016
- 4th Bi-monthly review will be on – Oct 4, 2016
- 5th Bi-monthly review will be on – Dec 6, 2016
- 6th Bi-monthly review will be on – Feb 7, 2017
Current Rates as announced in April 2016 are:
- Repo Rate – 6.50% (Reduced by 25 basis point)
- Reverse Repo Rate – 6.00% (increased by 25 basis point)
- CRR (Cash Reserve ratio) – 4% (Unchanged)
- Bank Rate – 7.00% (Reduced by 75 basis point)
- MSF (Marginal Standing Facility) – 7.00% (Reduced by 75 basis point)
- SLR (Statutory Liquidity Ratio) – 21.25% (Reduced by 25 basis point)
