Page 10 - Digi Notes - GA- 27-03-2016
P. 10
www.bankersguru.org
(General Awareness)
MMM
The Reserve Bank of India has released the final guidelines on calculating interest rates on
advances based on the marginal cost of FUNDS
Guidelines:
Quote: Fifth Monetary Policy Review
For monetary transmission to occur, lending rates have to be sensitive to the policy rate. With the introduction of the Base Rate
on July 1, 2010 banks could set their actual lending rates on loans and advances with reference to the Base Rate. At present,
banks are following different methodologies in computing their Base Rate – on the basis of average cost of funds, marginal cost
of funds or blended cost of funds (liabilities).
In order to improve the efficiency of monetary policy transmission, the Reserve Bank will
encourage banks to move in a time-bound manner to marginal-cost-of-funds-based determination of their Base Rate’.
BG advises its aspirants to understand and have a basic idea about Base Rate,Floating
rate loans and the Fifth Monetary Policy Review.
Date of Release – 23-Dec-15 SUBJECT: GA www.bankersguru.org
(General Awareness)
MMM
The Reserve Bank of India has released the final guidelines on calculating interest rates on
advances based on the marginal cost of FUNDS
Guidelines:
Quote: Fifth Monetary Policy Review
For monetary transmission to occur, lending rates have to be sensitive to the policy rate. With the introduction of the Base Rate
on July 1, 2010 banks could set their actual lending rates on loans and advances with reference to the Base Rate. At present,
banks are following different methodologies in computing their Base Rate – on the basis of average cost of funds, marginal cost
of funds or blended cost of funds (liabilities).
In order to improve the efficiency of monetary policy transmission, the Reserve Bank will
encourage banks to move in a time-bound manner to marginal-cost-of-funds-based determination of their Base Rate’.
BG advises its aspirants to understand and have a basic idea about Base Rate,Floating
rate loans and the Fifth Monetary Policy Review.
Date of Release – 23-Dec-15 SUBJECT: GA www.bankersguru.org
