Reserve Bank of India moves up Indian Interest rates
Added: (Wed May 18 2022)
Pressbox (Press Release) -
During the first week of this month , Indian Monetary Authority the Reserve Bank of India left hiked its Repo Rate by 0.40 % to 4.40 % in a surprise move . It follows spite of rising retail inflation and wholesale price index in last few months .
Repo Rate is the rate at which the Reserve Bank of India lends money to commercial banks in the event of shortfall of funds . Though the market was anticipating such hike in coming months , the move was sudden and taken in a special meeting of RBI's Monetary Policy Committee held in the first week unexpected . .
As a result , borrowing and deposit of commercial bank with interest rate directly linked to benchmark repo rate moved automatically up . Further MCLR ( Marginal Cost of Fund Based Lending Rate ) was raised by many banks in response to RBI move .
Now many leading banks have begin to alter the interest rates paid by them to their customers . The banks include Public Sector lender State Bank of India ( SBI ) for bulk deposits and many Private sector lenders and public sector banks for retail deposits . The altered rates are little higher than the present rates by 0.10 % pa to 0.40 % pa .
Now as many as seven banks are paying 7% pa or more to their senior citizen customers even for a short duration of one year .
The inflation figure released by the government of India for the month of April 2022 subsequent to RBI's move on interest rates is on the upward trend only . Hence many analysts are feeling that the first hike By RBI after 4 years is only the onset of a new northward journey of Indian interest rates .
We have to wait and see whether the RBI move is sufficient to tame the inflation or RBI has hike again in their next MPC meeting in the next month .
PLAN N PROGRESS
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