4th Bi-monthly Monetary Policy Review (2016-17)

Today RBI announced its 4th Bi- monthly Policy Rates for the year 2016-17 in Mumbai. Below are the details of the Monetary Statement.

Below are the basic definitions of the Policy Rates.

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. The Reserve bank uses this tool when it feels there is too much money floating in the banking system.

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.

Current Rates as announced today are:

1. Repo Rate – 6.25% (reduced by 25 basis points from 6.5 per cent to 6.25 per cent)

2. Reverse Repo Rate – 5.75%

3. CRR (Cash Reserve ratio) – 4% 

4. Bank Rate – 6.75% 

5. MSF (Marginal Standing Facility) – 6.75% 

6. SLR (Statutory Liquidity Ratio) – 20.75% (as per RBI official website)