The maximum rate reduction of 2 per cent is there in the tenor of 7-60 days. The rate would be 6.50 per cent as against existing 8.50 per cent. Besides, over Rs 1 crore term deposit between 61 days to 1 year would also attract lower interest of 7.75 per cent against 8.25 per cent, down 0.5 per cent. At the same time, 2-10 year fixed deposit in the same segment would earn 8.50 per cent, down 0.25 per cent. Earlier this week, RBI raised short-term lending (repo) rate by 0.25 per cent to 7.75 per cent making cost of fund expensive for the banks.
At the same time, the RBI lowered marginal standing facility (MSF) rate by a similar margin to 8.75 per cent. Accordingly, the bank rate is reduced to 8.75 per cent with immediate effect. Consequently, the reverse repo rate is adjusted upward to 6.75 per cent. The RBI has left unchanged other rates such as the cash reserve ratio at 4 per cent and the mandatory holdings in government securities and other liquid assets as a solvency measure (SLR) at 23 per cent. PTI