the rate at which reserve bank of india lends money to commercial banks is 5%.
the rate at which rbi lends money to commercial banks?
reserve bank of india
repo (repurchase) rate also known as the benchmark interest rate is the rate at which the rbi lends money to the commercial banks for a short-term (a maximum of 90 days). when the repo rate increases, borrowing from rbi becomes more expensive. if rbi wants to make it more expensive for the banks to borrow money, it increases the repo rate similarly, if it wants to make it cheaper for banks to borrow money it reduces the repo rate. if the repo rate is increased, banks can't carry out their business at a profit whereas the very opposite happens when the repo rate is cut down. generally, repo rates are cut down whenever the country needs to progress in banking and economy.
reserve bank of india
on 2 july 2009, sweden's riksbank was the first central bank in the world to implement a negative interest rate, when it lowered its repo rate (the rate at which a central bank lends short-term money to commercial banks against securities) to 0.25%. this caused its linked overnight deposit rate (the interest commercial banks get for depositing money with the central bank overnight) to be pushed down to −0.25%, while the overnight lending rate (the interest a central bank charges commercial banks for overnight lending) was lowered to 0.75%. this was done to counter economic slowdown due to the financial crises of 2008. the bank's deputy governor lars e. o. svensson stated that he had preferred a cut of the repo rate to 0.00%, as this would "entail a better balanced monetary policy, with lower unemployment and higher resource utilisation without inflation deviating too far from the target." the swedish move to a negative discount rate was followed with great interest by central banks around the world.
sveriges riksbank