Bank Rate
One of the oldest monetary policy instruments used by RBI.
Introduction
Bank Rate is one of the oldest monetary policy instruments used by RBI.
Meaning of Bank Rate
It is the rate at which RBI lends long-term funds to banks without any collateral.
Difference from Repo Rate
Bank rate is used for long-term lending, while repo is for short-term liquidity.
Significance
Changes in bank rate signal RBI’s long-term policy stance.
Present Relevance
Though less actively used today, bank rate remains a benchmark for penalties and calculations.
Conclusion
Bank rate plays a signaling role in India’s monetary policy framework.