RBI Monetary Policy Inadequate For Economy
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Business Economics; 23(10) Aug 16-31 2017Summary: The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points or 0.25% on August 1. It was an expected move. The repo rate is the rate at which the commercial banks take short term loan from the RBI. That is, this rate is an indication of the policy of banks to disburse loans to their customers. So if the repo rate falls, it is expected that the cost of funds of banks reduces and hence, it is expected that the cost of funds of the investors may be lower or banks can disburse loans to their customers at lower rates.
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The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points or 0.25% on August 1. It was an expected move. The repo rate is the rate at which the commercial banks take short term loan from the RBI. That is, this rate is an indication of the policy of banks to disburse loans to their customers. So if the repo rate falls, it is expected that the cost of funds of banks reduces and hence, it is expected that the cost of funds of the investors may be lower or banks can disburse loans to their customers at lower rates.
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