Search
RBI may increase reverse repo by 20-25bps
November 24, 2021
The Reserve Bank of India (RBI) may increase the reverse repo rate by a token of 20-25 basis points one month from now as a part of its monetary policy normalization process, as indicated by market analysts.
Reverse repo rate is the premium banks get for stopping overflow liquidity with RBI. Presently, this rate is at 3.35 percent. One premise point is equivalent to the 100th of a rating point.
The reverse repo rate was cut thrice in schedule year (CY) 2020: from 4.9 to 4 percent on March 27, 2020, from 4 percent to 3.75 percent on April 17, 2020, and from 3.75 to 3.35 percent on May 22, 2020.
Rahul Bajoria, Director and Chief Economist for India and the Antipodeans, Barclays, said: We anticipate that the RBI should build the reverse repo rate by a token 20-25 premise focuses (bps) at the December strategy meeting. Notwithstanding, an increase in the repo rate is probably going to just occur in April 2022.
Repo rate is the interest banks pay to the RBI for drawing liquidity to overcome short-term mismatches.
This rate was reduced in two phases in CY2020: from 5.15 to 4.4 percent on March 27, 2020, and from 4.4 to 4 percent on May 22, 2021.
Important Links:
- 4-IN-1 Professional Diploma in Banking, Financial Services & Insurance (PDBFSI): https://ask.careers/courses/4-in-1-professional-diploma-in-banking-financial-services-insurance-pdbfsi/
- Mumbai: https://ask.careers/cities/mumbai/
- TSCFM: https://ask.careers/institutes/tscfm/
