reverse repo rate

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Prateek Biyani (Querist)
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21 November 2007 What is repo rate and reverse repo rate issued by RBI. Please give the name of foreign banks working in India.

R.V.RAO

R.V.RAO (Expert)
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21 November 2007 AS PART OF RBI MEASURES TO CONTROL AND MONITOR CREDIT FLOW, AND CASHFLOW IN THE BANKING SYSTEM IN THE ECONOMY OF OUR COUNTRY, THE CREDIT POLICY IS ANNOUNCED BY RBI IN APRIL(PEAK PERIOD CREDIT POLICY ) AND OCTOBER( NON PEAK PERIOD CREDIT POLICY) EVERY YEAR TWICE .
AS A PART OF MONITORING THE CASH HOLDING LEVELS OF BANKS IN THE COUNTRY- TO CONTROL INFLATION AND ALSO TO ENSURE PROPER FLOW OF CASH AND CREDIT TO THE PRIORITY SECTOR AND CURB UNDUE CREDIT OR CASH FLOW TO THE NON PRIORITY SECTORS ,THE RBI REGULATEDS THESE CREDIT AND CASH AVAILABILITY LEVELS IN THE ECONOMY BY VARIOUS WEAPONS, LIKE
BANK RATE
REPORATE
REVERSEREPO RATE
CASH RESERVE RATIO
BANK RATE IN SIMPLE TERMS IS THE RATE AT WHICH RBI LENDS TO BANKS IN THE COUNTRY.
THE PRESENT BANK RATE IS 6%
REPORATE IS THE RATE AT WHICH RBI PARKS ITS SURPLUS FUNDS WITH BANKS AND COLLECTS INTEREST FROM BANKS. SO BANKS PAY PRESENTLY REPORATE @7.75% TO RBI .
SIMILARLY BANKS PARK THEIR SURPLUS FUNDS WITH RBI AND COLLECT INTEREST @ 6%WHICH IS CALLED REVERSE REPO RATE.
CASH RESERVE RATIO OR CRR NOW HIKED BY RBI ON 30 TH OCT 07 ( DATE OF ANNOUNCEMENT OF CREDIT POLICY) IS FROM 7% TO 7.5%. IT IS A PROPORTION OF BANKS DEPOSITS AND LIQUID ASSETS TO BE KEPT WITH RBI COMPULSORILY.
SO THESE ARE IN SIMPLE TERMS WEAPONS IN THE HANDS OF RBI TO SUCK EXCESS LIQUIDITY IN THE ECONOMY AND THUS CONTROL CASH AND CREDIT FLOW IN THE BANKING SYSTEM IN PARTICULAR AND IN THE ECONOMY IN GENERAL.
TO SUCK EVEN MORE LIQUIDITY FROM THE SYSTEM ,RBI MAY RESORT TO MARKET BORROWINGS AND IN RARE AND EXTRAORDINARY CIRCUMSTANCES TO CURB BLACK MONEY IN THE ECONOMY, RBI MAY EVEN RESORT TO DEMONETISATION ( CANCELLATION OF CERTAIN DENOMINATIONS OF CURRENCY LIKE RS. 500 OR RS. 1000 NOTES).
R.V.RAO

R.V.RAO

R.V.RAO (Expert)
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21 November 2007 SOME OF THE FOREIGN BANKS OPERATING IN INDIA ARE
BANK MUSCAT
BANK OF BAHRAIN AND KUWAIT
ABN-AMRO Bank N.V.
Abu Dhabi Commercial Bank Ltd.
American Express Bank Ltd.
Citibank N.A.
DBS Bank Ltd
Bank of Ceylon
BNP Paribas Bank
China Trust Commercial Bank
Deutsche Bank
HSBC
JPMorgan Chase Bank
Standard Chartered Bank
Scotia Bank
Taib Bank
By the year 2009, the list of foreign banks in India may be more and also indian banking scene will undergo many changes due to introduction of BASEL norms by RBI .
R.V.RAO

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