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  • Current Repo Rate 2022

    The Monetary Policy Committee (MPC) announced in September 2022 that the repo rate has been increased by 50 basis points and the rate is now 5.90%. During its meeting MPC has decided to keep the reverse repo rate unchanged at 3.35%. The Bank Rate and the marginal standing facility (MSF) rate also changed and is currently 6.15%.

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    What is REPO Rate?

    Repo rate is defined as the rate of interest at which the Reserve Bank of India (RBI) lends money to commercial banks. ''Repo'' stands for Repurchase Agreement or Repurchasing Option. Banks avail loans from the central bank (the RBI) by selling eligible securities. An agreement between the central bank and the commercial bank will be made to repurchase the securities at a price that is predetermined. This is done when banks face a shortage of funds or need to maintain liquidity in volatile market conditions. The RBI uses the repo rate to control inflation rates.

    RBI Repo Rate 29 Nov 2022

    Repo Rate 5.90%
    Bank Rate 6.15%
    Reverse Repo Rate 3.35%
    Marginal Standing Facility Rate 6.15%

    Find REPO Linked: Home Loan Interest Rate

    RBI Repo Rate Cut History 2022 -2005

    The change in repo rate in India since October 2005 can be summed up as follows:

    Effective Date Repo Rate %Change
    30 September 2022 5.90% 0.5%
    5 August 2022 5.40% 0.5%
    8 June 2022 4.90% 0.5%
    May 2022 4.40% 0.4%
    09 Oct 2020 4.00% 0.00%
    06 Aug 2020 4.00% 0.00%
    22 May 2020 4.00% 0.40%
    27 March 2020 4.40% 0.75%
    6 February 2020 5.15% 0.25%
    07 August, 2019 5.40% 0.35%
    06 June, 2019 5.75% 0.25%
    04 April, 2019 6.00% 0.25%
    07 February, 2019 6.25% 0.25%
    01 August, 2018 6.50% 0.25%
    06 June, 2018 6.25% 0.25%
    02 August, 2017 6.00% 0.25%
    04 October, 2016 6.25% 0.25%
    05 April, 2016 6.50% 0.25%
    29 September, 2015 6.75% 0.50%
    02 June, 2015 7.25% 0.25%
    04 March, 2015 7.50% 0.25%
    15 January, 2015 7.75% 0.25%
    28 January, 2014 8.00% -0.25%
    29 October, 2013 7.75% -0.25%
    20 September, 2013 7.50% -0.25%
    03 May, 2013 7.25% -0.50%
    17 March, 2011 6.75% -0.25%
    25 January, 2011 6.50% -0.25%
    02 November, 2010 6.25% -0.25%
    16 September, 2010 6.00% -0.25%
    27 July, 2010 5.75% -0.25%
    02 July, 2010 5.50% -0.25%
    20 April, 2010 5.25% -0.25%
    19 March, 2010 5.00% -0.25%
    21 April, 2009 4.75% 0.25%
    05 March, 2009 5.00% 0.50%
    05 January, 2009 5.50% 1.00%
    08 December, 2008 6.50% 1.00%
    03 November, 2008 7.50% 0.50%
    20 October, 2008 8.00% 1.00%
    30 July, 2008 9.00% -0.50%
    25 June, 2008 8.50% -0.50%
    12 June, 2008 8.00% -0.25%
    30 March, 2007 7.75% -0.25%
    31 January, 2007 7.50% -0.25%
    30 October, 2006 7.25% -0.25%
    25 July, 2006 7.00% -0.50%
    24 January, 2006 6.50% -0.25%
    26 October, 2005 6.25% 00.00

    How Does Repo Rate Work?

    As mentioned earlier, the repo rate is used by the central bank of India to control the flow of money in the market. When the market is hit by inflation, RBI increases the repo rate. An increased repo rate denotes that the banks who borrow money during this period from the central bank will have to pay higher interest. This discourages the banks to borrow money, which in turn, reduces the supply of money in the market and helps negate the inflation. Similarly, the repo rates are decreased in the case of a recession.

    How Does RBI Calculate Repo Rate?

    On the basis of the economic condition, as discussed in the last paragraph, the RBI regulates the repo rate. The rates are decided by the central bank on the basis of the inflation or recession in the market of the country.

    Repo Rate vs Reverse Repo Rate

    Repo Rate vs Reverse Repo Rate is one of the most important topics that we need to understand. The difference can be listed as follows:

    1. Repo rate is charged against funds lent by the RBI to commercial banks and other financial institutions.The reverse repo rate, on the other hand, is the rate of interest that is offered by the central bank to the commercial banks who deposit funds in the RBI treasury.
    2. Repo rate is always higher than the reverse repo rate.
    3. Repo rate helps to control the inflation in the market. The reverse repo rate, on the other hand, helps to control the supply of money in the market.

    What Is The Difference between the Repo rate and the MCLR rate?

    Marginal Cost of funds based Lending Rate or MCLR is a reference rate which is used internally for ascertaining the interest rate which can be levied by the banks on loans.

    The repo rate, on the other hand, is an interest rate which is determined by the Reserve Bank of India (RBI) and charged against the funds lent by the central bank to commercial banks and all other financial institutions.

    What effect does Repo Rate has on the life of a common man?

    The effect of repo rate on the life of common man is direct in terms of the increase in the overall interest. As discussed earlier, repo rate is the rate of interest which is charged by the RBI for funds lent to the commercial banks.

    When the repo rate increases, the interest rate at which commercial banks borrow money from the central bank increases and the borrowing becomes costlier. In turn, the commercial banks increase their lending rates to cope up with the hike in the repo rate. Thus, when common men borrow money from the commercial banks, the effective interest rate becomes higher and they end up paying higher interest amounts for the loan that they borrow.

    What Is The relationship between Inflation and Repo Rate?

    The repo rate is used by the central bank of India to control the supply of money in the Indian market. A higher repo rate helps in reducing the borrowing power of the commercial banks which, in turn, reduces the flow of cash in the market. This method helps to control inflation.

    Let us take an example here. Let us assume that the country has been hit by inflation and the RBI has set the repo rate at 10%. In this case, if a commercial bank is borrowing an amount of Rs.10,000 from the central bank, the interest amount for the same will be Rs.1,000. To avoid paying this higher rate of interest, the commercial banks decide to not borrow further from the RBI which reduces the supply of cash in the market. As the flow of cash reduces in the market, the demand is not met. This helps in checking the inflation and regulating it accordingly.

    FAQs on Current Repo Rate 2022
    1. What is Repo Rate?
    2. The rate of interest at which commercial banks borrow money from the RBI is called Repo Rate.

    3. What is the current repo rate?
    4. The current repo rate is 5.90%.

    5. What is the current reverse repo rate?
    6. The current reverse repo rate is 3.35%.

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