Repo Rate Will be Cut by 25 Basis Points to 6.5% by RBI

Repo rate has been cut down by 25 basis points to 6.5 per cent from 6.75 per cent, with immediate effect by the Reserve Bank of India (RBI) . In the first bi-monthly monetary policy review of the RBI for the 2016 - 17 fiscal the announcement in this regard was declared.

First bi-monthly monetary policy for the 2016 - 17 says

  • Repo rate:
  • The policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.75% to 6.5% has been reduced by the RBI.
  • It is the rate at which RBI offers to the financial system.
  • Cash reserve ratio (CRR) :
  • RBI has unaffected CRR and kept it at 4.0% of net demand and time liabilities (NDTL) .
  • Reverse repo rate:
  • RBI has used to reverse repo rate under the LAF to 6% .
  • The banks can keep excess funds with the RBI is called Reserve repo rate.
  • The RBI also announced number of measures to smoothen liquidity supply so that banks can lend to the creative sectors.

Examrace Team at Aug 21, 2021