Updates from RBI announcements

[waited_not_jaded09]

@rebornkid Thanks a lot that answered my qurstion.

 

[hosnloem]

@zashmaster In layman's terms, what does it mean to lower the reverse repo rate?

 

[jewels261]

@hosnloem Banks would get lower returns for parking their excess cash with RBI, which means banks might give out more loans, invest more.

 

[mikethebike]

@hosnloem RBI can borrow money from commercial banks and give back attractive interest rates back to banks if they chose to deposit in exchange for securities.

Lowering reverse repo rate is more of a correction measure so if you lower the rate banks will be disinterested in depositing with the RBI and will be willing to lend out more.

This policy is used in tandem with lowering repo rate to increase money supply in the economy. Lowering only reverse repo is hence a correction mechanism to maintain the spread. Your interest rates always move together.

 

[tessaherrin]

@zashmaster What the RBI ban on banking dividends means for your equity funds

https://www.livemint.com/money/pers...ans-for-your-equity-funds-11587111529885.html

 

[resjudicata]

@zashmaster Why is everytime there is an announcements, the markets drop?