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Banking terminology
Bank Rate
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans
and advances that it extends to commercial banks and other financial intermediaries. Changes in the bank rate
are often used by central banks to control the money supply.
Present Bank Rate 8.75%
Repo Rate
Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the banks have any shortage of
funds they can borrow it from RBI. A reduction in the repo rate will help banks to get money at a cheaper
rate. When the repo rate increases, borrowing from RBI becomes more expensive.
Present Repo Rate - 7.75%
Reverse Repo Rate
This is exact opposite of Repo rate. Reverse Repo rate is the rate at which Reserve Bank of India (RBI)
borrows money from banks. RBI uses this tool when it feels there is too much money floating in the banking
system. Banks are always happy to lend money to RBI since their money is in safe hands with a good interest.
An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive
interest rates.
Present Reverse Repo Rate 6.75%
CRR Rate
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to
increase the percent of this, the available amount with the banks comes down. RBI is using this method
(increase of CRR rate), to drain out the excessive money from the banks.
Present CRR 4%
SLR Rate
SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or
gold or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and
maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit. SLR is
determined as the percentage of total demand and percentage of time liabilities. Time Liabilities are the
liabilities a commercial bank liable to pay to the customers on their anytime demand. SLR is used to control
inflation and propel growth. Through SLR rate tuning the money supply in the system can be controlled
efficiently.
Present SLR 23%
Inflation

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Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy. An
increase in inflation figures occurs when there is an increase in the average level of prices in Goods and
services. Inflation happens when there are fewer Goods and more buyers; this will result in increase in the
price of Goods, since there is more demand and less supply of the goods.
Deflation
Deflation is the continuous decrease in prices of goods and services. Deflation occurs when the inflation rate
becomes negative (below zero) and stays there for a longer period.
PLR
The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually
the most prominent and stable business customers). The rate is almost always the same amongst major banks.
Adjustments to the prime rate are made by banks at the same time; although, the prime rate does not adjust
on any regular basis. The Prime Rate is usually adjusted at the same time and in correlation to the adjustments
of the Fed Funds Rate. Some banks use the name "Reference Rate" or "Base Lending Rate" to refer to their
Prime Lending Rate.
Deposit Rate
Interest Rates paid by a depository institution on the cash on deposit.
FII
FII (Foreign Institutional Investor) used to denote an investor, mostly in the form of an institution. An
institution established outside India, which proposes to invest in Indian market, in other words buying Indian
stocks. FII's generally buy in large volumes which has an impact on the stock markets. Institutional Investors
includes pension funds, mutual funds, Insurance Companies, Banks, etc..
FDI
FDI (Foreign Direct Investment) occurs with the purchase of the “physical assets or a significant amount of
ownership (stock) of a company in another country in order to gain a measure of management control” (Or)
A foreign company having a stake in a Indian Company.
IPO
IPO is Initial Public Offering. This is the first offering of shares to the general public from a company wishes
to list on the stock exchanges.
Disinvestment
The Selling of the government stake in public sector undertakings.
Fiscal Deficit
It is the difference between the government’s total receipts (excluding borrowings) and total expenditure.
Present Fiscal Deficit is 5.3%
Revenue deficit

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Banking terminology Bank Rate Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the bank rate are often used by central banks to control the money supply. Present Bank Rate – 8.75% Repo Rate Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the banks have any shortage of funds they can borrow it from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases, borrowing from RBI becomes more expensive.  Present Repo Rate - 7.75% Reverse Repo Rate This is exact opposite of Repo rate. Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. RBI uses this tool when it feels there is too much money floating in the banking system. Banks are always happy to lend money to RBI since their money is in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive interest rates. Present Reverse Repo Rate – 6.75% CRR Rate Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks. Present CRR – 4% SLR Rate SLR (Statut ...
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