This is a very basic post for the kids and for the people to explain the banking terminologies. Here is a conversation between Dad and Son explaining how the bank operates,
What are the implications of CRR, SLR, Repo Rate, Reverse Repo Rate and their impact on deposit rate, loan interest rate and on inflation?
Son: I have heard recently that Mr. Rajan has reduced Repo Rate by 50 basis points and everyone is saying that this is good for the market. Loan EMI may also come down. What is this rate cut means actually? I want to understand this.
Dad: To understand this you first need to know, how does a bank function. Continue reading “How does a bank operate?”
State Bank of India chairman Pratip Chaudhuri, yet again, took on the Reserve Bank of India (RBI), saying saying CRR is a “waste” for the economy and successive interest rate cuts by central bank have failed to contain inflation.
The CEO caused a flutter in the banking community by demanding the abolition of the Cash Reserve Ratio (CRR) in SBI vs RBI round II. RBI did promptly appointed a committee to look at this issue. The reserve ratios, CRR and SLR (Statutory Liquidity Reserve), are an important feature of Indian banking regulation. Continue reading “CRR VS SLR : ROUND II RBI VS SBI”