OMTEX CLASSES: Bank Rate

Bank Rate

(i) It is the rate at which central bank (RBI) lends money to commercial banks by discounting bills of exchange.

(ii) It acts as a guide line to the banks for fixing interest rates. If bank rate increases, interest rate wills goes up, and vice-versa.


(iii) The bank rate is decided by the Central Bank. In April 2010, the bank rate was maintained at 6% p.a