IBPS PO Mains SPECIAL : Short Note on Repo Rate, Reverse Repo Rate, MSF and Garnishee Order
- Nov 08, 2016
Dear Banking Exam Aspirants,
IBPS Mains is coming soon and Banking Awareness will play a major role in scoring marks in the exam. Thus in this post we are sharing short note on Repo Rate, Reverse Repo Rate, MSF and Garnishee Order. So, go through it and revise the same so that you can secure more in the Mains. This post has been prepared by one of our ardent readers Kunaldeep (KD) who has already cleared SBI PO 2016 Exam and waiting for his joining. All the best.
It is the rate at which bank borrows addition money required for it’s business for short term period(more than 2 days and upto 90 days) like in providing loans to their customers. It is also called as repurchase rate. Repo Rate is a short-term measure and it refers to short-term loans and used for controlling the amount of money in the market. security is required for taking this money from RBI.
Agar banks for kuch paise chahiye to security de kar rbi se paise le leti hai bank short term(within 90 days) ke liye, Iska interest rate isliye important hai kyuki wo paisa bank lend karti hai jisse unka profit hota hai.,chahe wo koi bhi loan de.
Current Repo Rate :- 6.25%
Reverse Repo Rate:
It is nothing but opposite of Repo Rate i.e. when banks have extra money in their system what they are gonna do with that money ? just like we do keep in our savings account with any bank, Banks also have their account with RBI. Extra money deposited there entitled them of getting some interest known as Reverse Repo rate. It is usually 100 basis point (1%) lower than repo rate, as we know lending rate is higher than borrowing rate. An increase in the reverse repo rate will decrease the money supply and vice-versa, other things remaining constant.
Ye Repo ka ulta hai, matlb kisi bank ke paas extra paisa hai aur unke kaam ka nahi hai to wo RBI ke paas rakh deti hai. uspe rbi jo interest deti hai wahi hai reverse repo rate. Isliye iska rate humesh Repo rate se kam hota hai. It is just like hum savings account jo khulwate hai bank me…jo extra paisa hum rakhte hai.
Current Reverse Repo Rate :- 5.75%
Marginal Standing Facility (MSF) Rate:
Just like banks have to maintain SLR on their NDTL and any shortfall of that fund is being taken from Call money mkt. But just think what if any bank is not able to arrange funds from call money market due to any reason ? Here comes the role of MSF(marginal standing facility). It is an emergency window opened for banks to borrow for their overnight funds. MSF is a very short term borrowing scheme for scheduled commercial banks.Under MSF, banks can borrow funds overnight up to 1% (100 basis points) of their net demand and time liabilities (NDTL)
Jo banks SLR maintain karti hai uske liye kuch funds short pad jaye to banks call money market se le leti hai but agar call money market me bhi paisa available na ho ya kisi se na mil paye to wo bank kya karegi ? kaha se paise layegi ? uske liye RBI ek window open karti hai usko kehte hai MSF(marginal standing facility). Isliye kabhi bhi dekhta iska rate aur call money ka rate almost same hoga. call money jaise overnight money hota hai usi tarah ye bhi overnight hota hai.
Current Marginal Standing Facility :- 6.75%
Maan lo main eek retailer hu aur Sakura ek wholeseller. But obvious hai mujhe goods credit pe milega wholeseller se. Maine usko koi bhi security nahi diya hai .Mere good faith me usne goods bhej diya. Ab suppose for any reason i refused to pay the money to Sakura, jiska reason kuch bhi ho sakta hai, Ab Sakura kya kar sakti hai ?
Sakura Court jaegi waha ye matter daalegi. Court ek order degi jisko bolte hai Garnishee order. wo order lekar sakura jaha mera current account hai business ka us bank me jaegi. Suppose mera due 5000 ka hai aur mere account me 10000 hai,to bank 5000 freeze kar degi tab tak jab tak court se final order na aa jaye ki actually fault kiska hai.