about bank rates
This query is : Resolved
Ravikishore
(Querist)
31 October 2008
what is meant by REPO rates what is the use of reducing it
01 November 2008
Banks take short term loans from RBI , and the interest RBI charges from them is called Repo rate .
How is Repo Rate linked to the interest we pay for loans from Bank ?
Simple , Banks need to charge more interest than they are paying. Banks will charge more than the REPO Rate for loans which they give. If Repo rate comes down , banks may also consider the interest rate they charge us .
Thats the reason that the cut in Reporate creates liquidity of funds and thereby inducing people to invest wherever they think fit and thereby improves the overall economy.
How is Repo Rate linked to the interest we pay for loans from Bank ?
Simple , Banks need to charge more interest than they are paying. Banks will charge more than the REPO Rate for loans which they give. If Repo rate comes down , banks may also consider the interest rate they charge us .
Thats the reason that the cut in Reporate creates liquidity of funds and thereby inducing people to invest wherever they think fit and thereby improves the overall economy.
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