Reverse Repo Rate

               Reverse Repo Rate (RRR) is the rate of interest provided by RBI to other banks for the funds deposited in the RBI. In simple terms, reverse repo rate is that rate at which RBI gets loan.. The current RRR is 7% which has rose from 6.5%. When RBI gets loan from banks at high rate of interest, more and more banks will supply to central bank because it is safe and earning is more. Effect of this will on financial market. Supply of money in financial market will decrease. In economics, it is simple rule, if supply is limited and demand increases, price of product will increase. Bank has lots of demand but due to limitation of supply, bank increases interest rate. That is the reason. But its positive effect will on credit. Due to decrease in the supply of credit in the market, inflation rate will decrease.

Repo rate affecting inflation

Repo Rate

             Repo rate is an interest rate charged by Central bank(RBI in India) for lending money to other banks. The current repo rate in India is 8%. The bank lend money to the public based on these repo rates charged by the central bank. RBI increases and decreases repo rate to control the Inflation. The hike in inflation made RBI to increase the repo rate from 7.25% to 8 % (dated 27/7/2011).The given below fig. describes,how hike in repo rate affects inflation.

In the above fig. describes how the repo rate hike lowers the inflation , it is the duty of RBI to control the inflation.

                            

stock market

Hey guys i am Rakesh from Amrita school of business , Bangalore.In this blog i will be posting all basic terms related to stock market.This is for those who are interested in share/stock market but doesn't know much about it. This blog is to develop my knowledge abt stock market and make my class mates involve in the stock market field and feed them some knowledge about it.It will also include some finance related information like RBI's day to day activity, about interest rates and lots more.

     Let us begin with.......