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Banking related General awareness: Important Rate definitions

Candidates aspiring to enter into the banking industry are expected to be well versed with the basic terminology of banking. Here is a video which explains the four main terms in banking in ample detail.

Bank Rate (Discount Rate):
The rate at which banks borrow money from RBI for a long period of time.
It's the rediscounted rate on the discounted government securities at which banks borrow money from RBI for a long time (around 5 years).

Bond:
An agreement, also called as a security. It is of two types:
  • Coupon Bond: Issued only by private firms
  • Zero Coupon Bond: Issued only by the government

Repo Rate:
Stands for repurchase option rate. Repo Rate is the rate at which the RBI lends money to the commercial banks within the country for a short period of time.

Reverse Repo Rate:
Reverse Repo Rate is the rate at which the RBI borrows from commercial banks within the country for a short period of time.


Banking related General awareness: Important Rate definitions Reviewed by Manohar Veera on 10:52:00 AM Rating: 5

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