Category: RBI Monetary Instruments

Market Stabilization Scheme

MSS (Market Stabilisation Scheme) securities are issued with the objective of providing the Reserve Bank of India with a stock of securities. With these securities, the RBI can intervene in the market for managing liquidity. The MSS scheme was launched in April 2004 to strengthen the RBI’s ability to conduct exchange rate and monetary management. […]

Bank Rate

The Bank Rate has been defined in the Reserve Bank of India Act, 1934 as the ‘standard rate at which RBI is prepared to buy or rediscount bills of exchange or other commercial papers eligible for purchase under this act. Increase in Bank Rate increases the cost of borrowing by commercial banks which results into […]

Reverse Repo Rate

Reverse repo rate is the rate at which the Reserve Bank of India borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country. The increase in the Repo rate will make the borrowing more expensive and increase the cost […]

Repo Rate

Repo rate is the rate at which the Reserve Bank of India lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation. Reduction in Repo rate helps the commercial banks to borrow at a cheaper rate and increase in Repo rate discourages […]

Statutory Liquidity Ratio (SLR)

◉ Statutory Liquidity Ratio :Statutory Liquidity Ratio (SLR) is the ratio of liquid assets to net demand and time liabilities (NDTL) which each bank is required statutorily to maintain. These liquid assets consist of excess reserves, unencumbered government and other approved securities and current account balance with other banks. Statutory Liquidity Ratio is determined and […]

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