BANK RATE, REPO

RATE, REVERSE
REPO RATE, CRR
AND SLR
BY
ANUP SHARMA
2ND SEM MBA
ISBD, MYSORE
MR. SUBBARAO
BANK RATE (DISCOUNT RATE)
 Bank Rate is the rate at which
central bank of the country 
(in India it is RBI)  allows
finance to commercial banks.

 It is a tool which central

bank uses for short-term
purposes to control Inflation.

 Any upward revision in Bank

Rate by central bank is an
indication that banks should
also increase deposit rates as
well as Prime Lending Rate.
 HISTORY
BANK RATE
12
11

10

6.5
BANK RATE
6 6
6

4 3.5

2
1

0
02.01.1900 15.11.1951 09.01.1971 04.07.1991 02.03.2001 CURRENT
REPO (REPURCHASE) RATE
 It is the rate at which the RBI lends shot-
term money to the banks.

 When the repo rate increases borrowing from

RBI becomes more expensive.

 When the repo rate increases borrowing from

RBI becomes more expensive. 
 HISTORY
REPO RATE
9

8 7.75
7.25
7
6.5
6.25
6
5.25
5
5 REPO RATE

0
26.10.2005 30.10.2006 30.03.2007 03.12.2008 19.03.2010 CURRENT
REVERSE REPO RATE
 Reverse Repo rate is the rate at which banks
park their short-term excess liquidity with
the RBI.

 The RBI uses this tool when it feels there is

too much money floating in the banking
system. 
 HISTORY
REVERSE REPO RATE
7

6
6

5 5
5

4 3.75 REVERSE REPO RATE

3.5
3.25
3

0
29.04.2005 25.07.2006 08.12.2008 21.04.2009 19.03.2010 CURRENT
CRR (CASH RESERVE RATIO)
 Banks in India are required to hold a certain
proportion of their deposits in the form of 
cash with RBI.

 RBI uses CRR either to drain excess liquidity

or to release funds needed for the economy
from time to time.
 HISTORY
CRR
16
15

14

12

10
9 9
CRR
8

6 5.75
6
4.5
4
3

0
16.09.1962 13.11.1976 22.11.1986 08.10.1992 14.06.2003 30.082008 Current
SLR
 It is used by bankers and indicates  the
minimum percentage of deposits that the
bank has to maintain in form of gold, cash or
other approved securities with RBI.

 It regulates the credit growth in India.

 HISTORY
SLR
45

40 38.5

35

30 28
25
25 24 SLR

20
20

15

10

0
16.03.1949 28.08.1970 22.09.1990 08.11.2008 Current
 BASE RATE
 Responding to the widespread feeling that
banks do not set their lending rates in a
scientific and transparent manner, the
Reserve Bank of India is in the last stages of
the consultative process to introduce a new
system.

 The proposed system will replace the

existing system of Benchmark Prime Lending
Rates (BPLR) with base rates.
FINDINGS
ANY QUERIES ??