Question

    Which of the followings committee of RBI is formed with

    the mission of fixing the benchmark policy interest rate (repo rate) to restrain inflation within the particular target level?
    A Secondary Market Committee Correct Answer Incorrect Answer
    B Monetary Policy Committee Correct Answer Incorrect Answer
    C Primary Market Committee Correct Answer Incorrect Answer
    D Fiscal Policy Committee Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    State Bank of India has increased interest rate on its bulk term deposits (Rs 2 crore and above) by 40-90 basis points, with effect from May 10. Bajaj Finance, a non-banking finance company, has also increased fixed deposit rates by upto 10 bps. The increase in interest rate on deposits comes close on the heels of the monetary policy committee (MPC) sharply revising the benchmark repo rate upwards by 40 basis points to 4.40% in an off-cycle meeting to tame rising inflation. The maximum increase by SBI is 90 basis points, in the 5–10-year tenure and three years to less than 5 years’ tenure. The interest rates in these two buckets have moved up to 4.50% as against 3.60% earlier. Bulk deposits for 46 – 179 days’ tenor and 180 – 210 days’ tenor will fetch an interest rate of 3.50% as against 3 and 3.10% earlier, respectively. Deposits with 211 days to less than a year tenor will have an interest rate of 3.75%.

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