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Banks Follow RBI's Policy Stance

Published on May 06, 2022
Current Context: Following RBI's announcement of policy rates, the Banks are aligning their interest rates to RBI.
Banks Follow RBI's Policy Stance
  • The Reserve Bank of India, in an unprecedented move, held an emergency meeting of MPC and announced new policy rates to contain the inflation which had soared past the 6% threshold.
  • The Reserve Bank of India has been mandated to maintain inflation in the range of 2 to 6 %. RBI hiked the repo by 40 bps following which ICICI Bank, Bank of Baroda, and Bank of India made corresponding hikes in their interest rates too.
  • As of now, 53 % of the lent amount is linked to MCLR, 25 % to the External Benchmark rates (Repo and G Sec), and 22 % to the fixed rates.
  • Banks following the suit will help contain the inflation as of now an estimated 1.68 lakh crore rupees of excess liquidity exists in the market.


Q.1 Which is the range of inflation mandated by the Government to RBI?
a. 4 to 6%
b. 2 to 6%
c. 2 to 4%
d. None
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