How many phases are there for ESIC UDC?

There are two phases for ESIC UDC: a) Preliminary Exam b) Mains Exam

Is there any negative marking in the ESIC UDC Exam?

For every incorrect answer, 0.25 marks will be deducted.

How to download the ESIC UDC Result 2020?

Candidates are advised to download the result from the official website.

What is the age limit for upper-division clerks for the ESIC examination?

Minimum: 18 years Maximum: 27 years

Bank Rate Vs Repo Rate in India: Check Out the Meaning, Current Rate and Differentiation

Jan 28 2025

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Bank Rate is a rate that the Reserve Bank of India (RBI) provides loans to commercial banks. It is an important tool to control the supply of money in the economy and manage inflation. The bank rate is the interest rate where the nation's central bank lends money to domestic banks. The Repo rate or Repurchase rate is the rate at which the RBI lends short money to commercial banks against securities. The Repo Rate is a critical tool for managing short-term liquidity in the banking system. This article explains the details of the Bank Rate Meaning, Bank Rate Current, What Is The Bank Rate In India, and the difference between Bank Rate vs Repo Rate. For any queries check the FAQ section of the Bank rate and Repo Rate.

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Bank Rate Meaning

Under Section 49 of the Reserve Bank of India Act, 1934, the Bank Rate has been defined as "the standard rate at which the Reserve Bank is prepared to buy or re-discount bills of exchange or other commercial paper eligible for purchase under the Act." The Reserve Bank of India (RBI) lends money to commercial banks at the "bank rate" at which it does not hold any collateral. No repurchase agreement will be drafted or agreed to without any form of collateral. Short-term loans with collateral are permitted by the RBI. Repo Rate is the term for this. Indian banks' interest rates are set by the RBI. Due to its capacity to control liquidity, it is typically greater than a Repo Rate.

History of Banking in India

Bank Rate Current

Presently, the maintenance of the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) only employ the bank rate to determine the penalty for default.

What Is The Bank Rate In India?

As per the RBI Policy rates the current bank rate in India is 6.75%. Since the bank rate is a crucial instrument for controlling liquidity, it is typically higher than the repo rate. Bank Rate, also referred to as "Discount Rate," is frequently mistaken for Overnight Rate. The overnight rate is the interest rate charged when banks borrow money from one another, as opposed to the bank rate, which is the interest rate the central bank charges on loans given to commercial banks. When the RBI raises the bank rate, banks' borrowing costs rise as well, which decreases the amount of money available on the market.

About Regional Rural Banks in India

How Bank Rate Is Determined?

A country's central bank, which regulates the banking industry and the amount of money in the economy, sets the interest rate. This is often carried out every three months to maintain the country's currency rates and limit inflation. A country's economy is affected by a bank rate change in a cascade of ways that affect all areas of the economy. For instance, changes in interest rates cause changes in stock market prices. Customers are impacted by changes in bank rates since they affect the rates at which they can obtain loans.

Difference between Bank Rate and Repo Rate

Even while the Bank Rate and Repo Rate are both set by the central bank and used to monitor and manage the market's cash flow, they also have some notable differences.

Government Banks in India

Diff. between Bank Rate and Repo Rate
Bank Rate	Repo Rate
Loans given by the central bank to commercial banks are subject to bank rates.	Repurchasing securities that commercial banks have sold to the central bank is subject to a repo rate.
Bank Rate is charged without using any collateral.	When the Repo Rate is levied, securities, bonds, agreements, and collateral are involved.
Repo rates are lower than the bank rates always.	Due to its capacity to control liquidity, it is typically greater than a Repo Rate.
An increase in the bank rate has a direct impact on the interest rates offered to customers, which limits their ability to get loans and harms overall economic growth.	The banks typically handle Repo Rate increases, so clients are not immediately impacted.
The long-term financial needs of commercial banks are met by Bank Rate.	Repo Rate emphasizes short-term financial needs.

FAQs - Bank Rate and Repo Rate In India

Q. What is a bank rate?

The Reserve Bank of India (RBI) lends money to commercial banks at the "bank rate" at which it does not hold any collateral.

Q. What is the current bank rate in India?

As per the RBI Policy rates the current bank rate in India is 6.75%.

Q. The bank rate is determined by which organization?

RBI determines the bank rate in India.

Q. Whether bank rate and repo rate are same?

No. The Reserve Bank of India (RBI) lends money to commercial banks at the "bank rate" at which it does not hold any collateral. No repurchase agreement will be drafted or agreed to without any form of collateral. Short-term loans with collateral are permitted by the RBI. Repo Rate is the term for this.