Difference between a bank rate and a REPO rate with respect to RBI

Repo rate : The commercial Bank sells the security to RBI to raise money. When banks sell security , banks promise to buy back the same security from RBI at a predetermined date with an interest at the repo rate .

Think of it in this way:

I want ₹100 to buy my favourite toy at the local toy store.But I don’t have that kind of cash on me. So I go to my friend who agrees to lend me the required amount but he wants some sort of collateral so that he’s assured that I will pay him back. So I give him a toy i have currently and he lends me the money. Later I repay him the money with some interest to compensate for the risk that he undertook by lending me cash and I buy back my toy. So this interest rate is called Repo rate. It is basically a repurchase argument.

Reverse Repo Rate : This is the same thing as the above,except that in this case it is the Commercial bank that gives surplus cash that exists with them to the RBI and the RBI later gives it back with some interest and that interest rate is called the Reverse repo Rate.

Bank Rate : Bank rate is the rate at which RBI lends money to commercial banks without selling or buying any security.This is generally a last resort method and hence no collateral is required.Resorting to the same example as above,what if I didn’t have a toy with me currently and still needed the money?So my friend still lends me the cash but now demands a higher interest to compensate for the higher risk as he has no collateral with him!

Generally the bank rate is 100 basis points above the repo rate.Similarly the repo rate is 100 basis points above the reverse repo rate.This isn’t a rule,but is generally the case.

The other differences include that the Repos are generally for short term period while the money is borrowed at the bank rate for a longer period of time.The bank rate is always higher than the repo rate in the country.

The repo rate and the reverse repo rate are important tools for controlling inflation in the country.

RBI Bank Rates in Indian Banking - 2018

Latest RBI Bank Rates in Indian Banking - 2018

SLR Rate	CRR	MSF	Repo Rate	Reverse Repo Rate	Base Rate
19.5%	4%	6.5%	6.25%	6%	8.65% - 9.45%

RBI Repo Rate Trend Chart

Repo rate also known as the benchmark interest rate is the rate at which the RBI lends money to the banks for a short term. When the repo rate increases, borrowing from RBI becomes more expensive. If 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. Current repo rate is 6.25%

Reverse Repo rate is the short term borrowing rate at which RBI borrows money from banks. The Reserve bank uses this tool when it feels there is too much money floating in the banking system. An increase in the reverse repo rate means that the banks will get a higher rate of interest from RBI. As a result, banks prefer to lend their money to RBI which is always safe instead of lending it others (people, companies etc) which is always risky. 

Repo Rate signifies the rate at which liquidity is injected in the banking system by RBI, whereas Reverse Repo rate signifies the rate at which the central bank absorbs liquidity from the banks.

CRR - Cash Reserve Ratio - Banks in India are required to hold a certain proportion of their deposits in the form of cash. However Banks don't hold these as cash with themselves, they deposit such cash(aka currency chests) with Reserve Bank of India , which is considered as equivalent to holding cash with themselves. This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio.

When a bank's deposits increase by Rs100, and if the cash reserve ratio is 9%, the banks will have to hold Rs. 9 with RBI and the bank will be able to use only Rs 91 for investments and lending, credit purpose. Therefore, higher the ratio, the lower is the amount that banks will be able to use for lending and investment. This power of Reserve bank of India to reduce the lendable amount by increasing the CRR, makes it an instrument in the hands of a central bank through which it can control the amount that banks lend. Thus, it is a tool used by RBI to control liquidity in the banking system.


SLR - Statutory Liquidity Ratio - Every bank is required to maintain at the close of business every day, a minimum proportion of their Net Demand and Time Liabilities as liquid assets in the form of cash, gold and un-encumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR). RBI is empowered to increase this ratio up to 40%. An increase in SLR also restricts the bank's leverage position to pump more money into the economy.

Net Demand Liabilities - Bank accounts from which you can withdraw your money at any time like your savings accounts and current account.
Time Liabilities - Bank accounts where you cannot immediately withdraw your money but have to wait for certain period. e.g. Fixed deposit accounts. 

Call Rate - Inter bank borrowing rate - Interest Rate paid by the banks for lending and borrowing funds with maturity period ranging from one day to 14 days. Call money market deals with extremely short term lending between banks themselves. After Lehman Brothers went bankrupt Call Rate sky rocketed to such an insane level that banks stopped lending to other banks.


MSF - Marginal Standing facility - It is a special window for banks to borrow from RBI against approved government securities in an emergency situation like an acute cash shortage. MSF rate is higher then Repo rate. Current MSF Rate: 6.5%


Bank Rate - This is the long term rate(Repo rate is for short term) at which central bank (RBI) lends money to other banks or financial institutions. Bank rate is not used by RBI for monetary management now. It is now same as the MSF rate. Current bank rate is 6.5%

Telangana GK Objective Questions:

1) What was Telangana formed?

2) Who took oath as first Governor of Telangana?

3)  The famous Warangal fort was built by?

4) When was Telangana merged with AP?

5) Which party formed fisrt government in Telangana?

6) Total number of districts in telangana?

7) What is the Literacy rate in telangana?

8) In which year charminar was built?

9) What is the state bird of telangana?

9) Wht is the largest district in telangana?

10) Which village in telangana is famous for paper industry?

SPECIAL QUESTIONS

SPECIAL  QUESTIONS

1. The speech of annhilation of caste (1937) was given by ------- Dr. BR Ambedkar
2. Ants go in a line by secretion of ? ------- Hormones
3. World largest Uranium producing country is ? ------ Kazakhstan
4. Widal test is used to detect ----------- Typhoid
5. which state is Not in Seven sisters (North eastern states ) --------- Sikkim
6.India largest producer and found in black sand beaches -------- Iliminite
7. Which of the following is wrongly matched ------- Nagarjuna sagar---Cauvery
8. Who wrote the Book - Partition of India ? ------------ Jaswant Singh
9. Food poisoning organism is ? -------------Staphylococus aureus
10. The election of Vice president can be challenged before ? ------- Supreme court
11. 87:10:3 ( copper :Tin: Zink) ?--------- Brass
12.Name the Only city in a world situated in two continents of the world ? ------ Istambul
13. Which Portion of heart received oxygenated blood ? ---------- Left atrium
14. Which of the following is not an epic ? -------- Canterbury Tales
15. Who was the National flag bearer at the closing ceremony of London-2012 Olympics ? -- Marykom
16.16th Summit of Non aligned movement held recently at which country ? --------Iran
17. What is Body Mass Index (BMI) ? ----------- Weight of the person /Height^2
18. what is Good Blood Cholesterol ------ HDL
19. Badami caves made during the regime of which rulers ? ----------- Chalukya
20. What used in industry to etch glasses ?---------- Hydrofluoric acid
21. Jawaharlal Nehru port ---Mumbai ; Kandla-----Gujarat; Para deep port ----Odessa
22. Name the famous poet who was deeply affected by Tagore Gitanjali ?------ William Bulter Yeats
23. Blue vitriol another name for ? ----- Copper sulphate
24. Article confer power on the supreme court to issue appropriate direction -------- Article 32
25. Yojana for employment on 1st April 2005 is ? ------ Rajiv Gandhi Kalyan yojana
26. Khaira decease of paddy is due to soil deficiency of ? ------- Zink

LARGEST PRODUCERS

LARGEST PRODUCERS

1.The largest producer of paddy in India- West Bengal
2.The largest producer of wheat in India- Uttar Pradesh
3.The largest producer of sugarcane in India- Uttar Pradesh
4.The largest producer of groundnut in India- Gujarat
5.The largest producer of tea in India- Assam
6.The largest producer of coffee in India- Karnataka
7.The largest producer of jute in India- West Bengal
8.The largest producer of tobacco in India- Andhra Pradesh
9.The largest producer of bananas in India- Tamilnadu
10.The largest producer of saffron in India- Jammu&Kashmir
11.The largest producer of onion in India- Maharashtra
12.The largest producer of black pepper in India- Kerala
13.The largest producer of cotton in India- Gujarat
14.The largest producer of bamboos in India- Assam

Locations of International Headquarters

Locations of International Headquarters

 Locations of International Headquarters

1. United Nations Organization (UNO) - New York, USA
2. United Nations Children's Fund (UNICEF) - New York, USA
3. United Nations Educational, Scientific and Cultural Organization (UNESCO) - P
aris, France
4. United Nations Industrial Development Organization (UNIDO) - Vienna, Austria
5. World Health Organization (WHO) - Geneva, Switzerland
6. United Nations Fund for Population Activities (UNFPA) - New York, USA
7. International Atomic Energy Agency (IAEA) - Vienna, Austria
8. World Bank - Washington, D.C., United States
9. International Committee of the Red Cross (ICRC) - Geneva, Switzerland
10. International Maritime Organization (IMO) - London, United Kingdom
11. Universal Postal Union (UPU) - Bern, Switzerland
12. Food and Agriculture Organization (FAO) - Rome, Italy
13. World Meteorological Organization (WMO) - Geneva, Switzerland
14. South Asian Association for Regional Cooperation (SAARC) - Kathmandu, Nepal
15. International Labour Organization (ILO) - Geneva, Switzerland
16. International Monetary Fund (IMF) - Washington, D.C., United States
17. World Trade Organization (WTO) - Geneva, Switzerland
18. International Court of Justice (World Court or ICJ) - The Hague, Netherlands
19. Amnesty International - London, United Kingdom
20. Transparency International (TI) - Berlin, Germany
21. World Intellectual Property Organization (WIPO) - Geneva,WIPO-HQ Switzerland
22. International Renewable Energy Agency (IRENA) - Abu Dhabi, United Arab Emira
tes
23. Commonwealth of Nations - London, United Kingdom
24. International Organization for Standardization (ISO) - Geneva, Switzerland

                                                       CURRENT AFFAIRS

  Q.1 The three-month long regional media campaign on Mission Indradhanush conducted by the Nagaland and Manipur Regional Office of the Directorate of Field Publicity(DFP), Ministry of Information and Broadcasting, Government of India concludes on 29th January, 2016 at …
  aSilchar   bImphal   cItanagar   dGuwahati

  Q.2 National Investigation Agency on 29th January has arrested one of the following terrorists for his involvement in the Church Street blast case of Bangalore (28th of December 2014). Name him.
  aAbu Hamza   bMohd. Rafeeq   cWadhawa Singh   dAmir Raja Khan

  Q.3 In Puducherry, Lt Governor AK Singh has launched the mobile App that ensure safety and security of women in January, 2016. Name the app.
  aSAKTI   bMITRA   cMADAD   dSAHAYATA

  Q.4 The Government of India has signed an 80million US dollar loan agreement with one of the following banks to continue improving infrastructure in Agartala and Aizwal in January, 2016. Identify the Bank.
  aWorld Bank
  bAsian Development Bank
  cBank for International Settlements
  dInternational Development Association

  Q.5 Name the Gurgaon Hyperlocal delivery startup for medicines and healthcare products, which has tied up with Patanjali Ayurved, the consumer products company, co-founded by Yoga guru Baba Ramdev in January, 2016?
  aEXL   bPluss   cAppy Pie   dPunj Lloyd Limited

  Q.6 Maiden consignment of six metro coaches made in India were shipped to one of the following countries from Mumbai port by the government of India in January, 2016. Identify the country.
  aNepal   bChina   cAustralia   dMauritius

  Q.7 Who among the following has been appointed as the Additional Independent Director of the diversified group ITC Ltd in January, 2016?
  aAsha Roy   bUsha Roy   cNibedita Ray   dNirupama Rao

  Q.8 Which of the following pairs have clinched the Australian Open women's doubles champions in January, 2016?
 a Sania Mirza and Martina Hingis
  bElena Vesnina and Bruno Soares
  cMartina Hingis and Elena Vesnina
  dAndrea Hlavackova and Lucie Hradecka

  Q.9 Which of the following films staring Bollywood star Akshay Kumar has been declared tax free in the In Uttar Pradesh in January, 2016?
  aFan   bAirlift   cNeerja   dJagga Jasoos

  Q.10  Centre for Environment and Energy Development (CEED) on 28th January, 2016 launched 'Care for Air' campaign for reducing pollution in one of the following cities to help improve ambient air quality. Identify the city from the given options.
  aPatna   bMumbai   cNew Delhi   dUttar Pradesh