RBI hikes Repo Rate by 25 basis points to 6.25%

KalingaTV News Network

Mumbai: The Reserve Bank of India (RBI) on Wednesday in its second bi-monthly Monetary Policy of 2018-19 hiked the Repo Rate under the Liquidity Adjustment Facility by 25 basis points from 6 per cent to 6.25 per cent.

The repo (or repurchase) rate is the rate of interest which the RBI charges to lend short-term loans to the commercial banks.

The reverse repo rate under which the RBI borrows from banks was adjusted to 6 per cent.

The last repo rate hike was announced in January 2014 when the short-term lending rate was increased to 8 per cent. Since then, RBI has either reduced the rate or maintained status quo.

The monetary policy committee (MPC) headed by RBI Governor Urjit Patel also allowed 2 per cent more SLR (statutory liquidity ratio) carve out to meet liquidity coverage ratio. The banks can now use SLR carve out of 13 per cent to meet liquidity cover ratio.

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