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Following a warning from the RBI, banks might lend their excess funds, leading to a decrease in call money rates
October 10, 2023
The Reserve Bank of India (RBI) has warned banks about their extra money. Now, banks might lend this extra money to others, causing the call money rates to go down. Call money rates show the interest rates when banks lend and borrow money from each other for a short time.
The RBI is worried about how banks handle their money. They want banks to lend the extra money they have. This helps the economy because it makes loans easier to get, encouraging businesses and people to borrow.
When call money rates go down, other interest rates might also decrease. This means borrowing money could become cheaper for businesses and people. The RBI is doing this to keep the country\’s finances stable and help the economy grow. Because of the RBI\’s advice, banks are likely to lend more. This could lead to lower costs for borrowing money. It creates a good environment for more investments and loans in the country. This strategic manoeuvre aligns with the RBI\’s efforts to maintain financial stability and support economic growth in the country.
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