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Repo rate is the rate at which banks borrow funds from
the RBI to meet the gap between the demand they are
facing for money (loans) and how much they have on
hand to lend.
If the RBI wants to make it more expensive for the banks
to borrow money, it increases the repo rate; similarly, if
it wants to make it cheaper for banks to borrow
money, it reduces the repo rate.
Currently Repo Rate is 7.75%
This is the exact opposite of repo rate. Currently it is 6.75
The rate at which RBI borrows money from the banks (or
banks lend money to the RBI) is termed the reverse repo
rate. The RBI uses this tool when it feels there is too
much money floating in the banking system
If the reverse repo rate is increased, it means the RBI will
borrow money from the bank and offer them a lucrative
rate of interest. As a result, banks would prefer to keep
their money with the RBI (which is absolutely risk free)
instead of lending it out (this option comes with a
certain amount of risk)
Besides the CRR, banks are required to invest a portion
of their deposits in government securities as a part of
their statutory liquidity ratio (SLR) requirements. What
SLR does is again restrict the bank’s leverage in
pumping more money into the economy.
SLR is 23%
Also called the cash reserve ratio, refers to a portion of
deposits (as cash) which banks have to keep/maintain
with the RBI. This serves two purposes. It ensures that a
portion of bank deposits is totally risk-free and secondly
it enables that RBI control liquidity in the system, and
thereby, inflation by tying their hands in lending money
Currently CRR is 4 %
Crr, slr, repo rate

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Crr, slr, repo rate

  • 1.
  • 2. Repo rate is the rate at which banks borrow funds from the RBI to meet the gap between the demand they are facing for money (loans) and how much they have on hand to lend. If the RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate. Currently Repo Rate is 7.75%
  • 3. This is the exact opposite of repo rate. Currently it is 6.75 The rate at which RBI borrows money from the banks (or banks lend money to the RBI) is termed the reverse repo rate. The RBI uses this tool when it feels there is too much money floating in the banking system If the reverse repo rate is increased, it means the RBI will borrow money from the bank and offer them a lucrative rate of interest. As a result, banks would prefer to keep their money with the RBI (which is absolutely risk free) instead of lending it out (this option comes with a certain amount of risk)
  • 4. Besides the CRR, banks are required to invest a portion of their deposits in government securities as a part of their statutory liquidity ratio (SLR) requirements. What SLR does is again restrict the bank’s leverage in pumping more money into the economy. SLR is 23%
  • 5. Also called the cash reserve ratio, refers to a portion of deposits (as cash) which banks have to keep/maintain with the RBI. This serves two purposes. It ensures that a portion of bank deposits is totally risk-free and secondly it enables that RBI control liquidity in the system, and thereby, inflation by tying their hands in lending money Currently CRR is 4 %