Thursday, October 27, 2011

The increase in the Repo(13th increase in last 18 months)

The increase in the Repo (rate at which RBI extends credit to banks) and Reverse Repo (rate at which RBI borrows from banks) by 25 basis points was announced on sep.25th 2011 by RBI Governor D. Subbarao while reviewing the second quarter review of the monetary policy 2011-12 on the day.

The contention of the RBI that the Repo and Reverse Repo rates are being raised to contain inflation has infuriated the industrialists/technocrats. “RBI should look at alternative avenues to contain inflation as frequent increase in Repo and Reverse Repo rates is making the loans dearer every time.

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