New Delhi: The Reserve Bank has once again increased the interest rate on short-term loans to commercial banks. Repo rate hiked by 0.35 percent to 6.25 percent. Banks will increase interest on home, auto and personal loans. The monthly repayment (EMI) or repayment period will increase.
The RBA has raised the repo rate four times in a row to reduce the money supply and control inflation. Increased by 50 basis points in September. It has been raised by 190 basis points this year. The current repo rate is 6.25 percent. It is assumed that the reason for the continuous increase is the global economic recession, the appreciation of the US dollar and the ongoing war situation.
What is repo rate?
When demand for loans increases, RBI lends to banks if they do not have cash in hand. Repo is the interest rate for that.
What is Reverse Repo?
If money accumulates in the hands of banks without the opportunity to lend, the RBI will accept it as deposits. Reverse repo is the interest paid by the Reserve Bank to the banks.
English Summary: Reserve Bank of india raises repo rate by 35 basis points to 6.25%.