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Bank rate increased from 6% to 9.5%
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Bank rate increased from 6% to 9.5%
by pca Tue Feb 14, 2012 11:14 am
Dear friends,
RBI has increased Bank rate u/s 49 of RBI Act from 6% to 9.5%. Consequently, minimum rate of interest that can be charged on inter-corporate loans u/s 372A(3) of
Companies Act also gets increased to 9.5%.
Thanks
****
RBI/2011-2012/396
Ref.No.MPD.BC.352/05.03.004/2011-12
February 13, 2012
Magha 24, 1933 (Saka)
To
All Scheduled Commercial Banks
Bank Rate
Section 49 of the Reserve Bank of India Act, 1934 requires the Reserve Bank to make public (from time to time) the standard rate at which it is prepared to buy or re-discount
bills of exchange or other commercial paper eligible for purchase under that Act.
2. Being the discount rate, the Bank Rate should technically be higher than the policy repo rate. The Bank Rate has, however, been kept unchanged at 6 per cent since April
2003. This was mainly for the reason that monetary policy signalling was done through modulations in the reverse repo rate and the repo rate under the Liquidity Adjustment
Facility (LAF) (till May 3, 2011) and the policy repo rate under the revised operating procedure of monetary policy (from May 3, 2011 onwards). Moreover, under the revised
operating procedure, marginal standing facility (MSF), instituted at 100 basis points above the policy repo rate, has been in operation, which in many ways serves the purpose of
the Bank Rate.
3. While the policy repo rate and the MSF rate have become operational, the Bank Rate continues to remain at 6 per cent. Currently, the Bank Rate acts as the penal rate
charged on banks for shortfalls in meeting their reserve requirements (cash reserve ratio and statutory liquidity ratio). The Bank Rate is also used by several other organisations
as a reference rate for indexation purposes.
4. The Reserve Bank has consulted various organizations/stakeholders relying on the Bank Rate as a reference rate. Based on the feedback received, it is determined that the
Bank Rate should normally stay aligned to the MSF rate. Accordingly, it has been decided that with effect from the close of business today (February 13, 2012), the Bank Rate
will stand increased by 350 basis points, i.e., from 6.00 per cent per annum to 9.50 per cent per annum. This should be viewed and understood as one-time technical adjustment
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6/17/2014 Bank rate increased from 6% to 9.5% | feeleminds.com
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to align the Bank Rate with the MSF rate rather than a change in the monetary policy stance.
5. All penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, will also stand revised as indicated in the Annex.
6. Kindly acknowledge receipt of this letter to the Adviser-in-Charge, Monetary Policy Department, Reserve Bank of India, Central Office, Shahid Bhagat Singh Road, Mumbai
400 001.
D. Subbarao
Governor
--------------------------------------------------------------------------------
PC Agrawal
Aurangabad (Maharashtra)
pca
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Re: Bank rate increased from 6% to 9.5%
by RAWATCS Fri Mar 02, 2012 11:43 am
Dear Mr. Agrawal
Kindly inform when(Date & Time) was the circular uploaded on RBI site? This information is crucial for one of our transactions. Kindly help.
Thanks & Regards
RAWATCS
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Re: Bank rate increased from 6% to 9.5%
by amarkakaria Fri Mar 02, 2012 1:24 pm
What is the effective date for this increase? Is it with immediate effect? Please confirm.
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Amar Kakaria
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Re: Bank rate increased from 6% to 9.5%
by RAWATCS Fri Mar 02, 2012 4:23 pm
From the close of business hours on 13/02/2012. Thanks
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Re: Bank rate increased from 6% to 9.5%
by pca Tue Mar 06, 2012 9:34 pm
I do not know the date and time when RBI had put the circular on its website. I had received the circular from RBI on mail.
PC Agrawal
Aurangabad (Maharashtra)
pca
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Posts: 1124
Joined: Sun Jul 08, 2007 9:35 am
Location: Aurangabad (Maharashtra)
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