• 9964432222
  • Mail Us
  • Appointment
  • Locate Us
  • Chat Now
  • Courses
  • Login
  • Register
Manifest IAS
JournalsOfIndia
Manifest Learning Academy
  • Home
  • SNIPPETSfor Prelims
  • ARTICLESfor Mains
  • BROWSEBY SOURCE
  • DOWNLOADS
No Result
View All Result
  • Home
  • SNIPPETSfor Prelims
  • ARTICLESfor Mains
  • BROWSEBY SOURCE
  • DOWNLOADS
No Result
View All Result
JournalsOfIndia
No Result
View All Result
Home Economy

Regional Rural Bank

January 11, 2021
in Economy
Reading Time: 3 mins read
0
Regional Rural Bank
424
VIEWS
Share on WhatsAppShare on TelegramShare on Facebook
image_pdfMake PDF

In news

Reserve Bank of India (RBI) will permit Scheduled Regional Rural Banks to access the liquidity adjustment facility, the marginal standing facility, and the call money market.

Regional Rural Banks

  • The nationalization of the banks in 1969 boosted the confidence of the public in the Banking system of the country.
  • However, in the early 1970s, there was a feeling that even after nationalization, there were cultural issues which made it difficult for commercial banks, even under government ownership, to lend to farmers.
  • This issue was taken up by the government and it set up the Narasimham Working Group in 1975.
  • On the basis of this committee’s recommendations, a Regional Rural Banks Ordinance was promulgated in September 1975, which was replaced by the Regional Rural Banks Act 1976.
  • Regional Rural Banks came into existence on Gandhi Jayanti in 1975 with the formation of a Prathama Grameen Bank.
  • The RRBs were owned by three entities with their respective shares as follows:
    • Central Government – 50%
    • State government – 15%
    • Sponsor bank – 35%

Regulation of RRBs

Regional Rural Banks are regulated by RBI and supervised by National Bank for Agriculture and Rural Development (NABARD). 

Liquidity Adjustment Facility (LAF) 

  • Primary instrument of Reserve Bank of India for modulating liquidity and transmitting interest rate signals to the market. 
  • t refers to the difference between the two key rates viz. repo rate and reverse repo rate. 
  • Informally, Liquidity Adjustment Facility is also known as Liquidity Corridor.

Liquidity Adjustment Facility works?

  • Under Repo, the banks borrow money from RBI to meet short term needs by putting government securities (G-secs) as collateral. Under Reverse Repo, RBI borrows money from banks by lending securities. 
  • While repo injects liquidity into the system, the Reverse repo absorbs the liquidity from the system. 
  • RBI only announces Repo Rate. The Reverse Repo Rate is linked to Repo Rate and is 100 basis points (1%) below repo rate. 

Marginal standing facility (MSF) 

  • Window for banks to borrow from the Reserve Bank of India in an emergency when interbank liquidity dries up completely. 
  • The Marginal standing facility is a scheme launched by RBI while reforming the monetary policy in 2011-12.
  • It is a penal rate at which banks can borrow money from RBI when they are completely exhausted of all borrowing assistance. 
  • The Marginal Standing facility allows banks to borrow money with an interest rate above the repo rate and can be termed as the Marginal standing facility rate.

MSF Description

  • Banks borrow from the RBI by pledging government securities at a rate greater than the repo rate under LAF (liquidity adjustment facility).
  • The MSF rate is pegged 100 basis points or a percentage point above the repo rate.
  • Under MSF, banks can borrow funds up to one percent of their net demand and time liabilities (NDTL).
  • The minimum amount for which RBI receives application is Rs.1 Crore, and afterward in multiples of Rs.1 Crore.

Call Money Market 

  • The call money market part of the Indian Money Market, where the day-to-day surplus funds are traded. The money market is a market for short-term financial assets that are close substitutes of money. Important feature of a money market instrument is that it is liquid and can be turned into money quickly at low cost .
  • The loans short-term duration from 1 to 14 days, and are traded in the call money market. The money that is lent for one day in this market is known as “Call Money”, and if it exceeds one day (but less than 15 days) it is referred to as “Notice Money”. Term Money refers to Money lent for 15 days or more in the InterBank Market.
image_pdfMake PDF
Source: PRS India & The Hindu
Tags: Prelims

Related Posts

Goods and Services Tax (GST) Council

Goods and Services Tax (GST) Council

July 5, 2022
Windfall Tax

Windfall Tax

July 4, 2022
Financial Services Institutions Bureau (FSIB)

Financial Services Institutions Bureau (FSIB)

July 4, 2022
Ease of Doing Business (EoDB) Ranking for states

Ease of Doing Business (EoDB) Ranking for states

July 2, 2022
Pay Roll Automation for Disbursement of Monthly Allowances (PADMA)

Pay Roll Automation for Disbursement of Monthly Allowances (PADMA)

July 2, 2022
Computerisation of Primary Agricultural Credit Societies (PACS)

Computerisation of Primary Agricultural Credit Societies (PACS)

July 1, 2022
12th WTO Ministerial Conference

12th WTO Ministerial Conference

June 30, 2022
“National Highway Excellence Awards” 2021

“National Highway Excellence Awards” 2021

June 28, 2022
Global Liveability Index, 2022

Global Liveability Index, 2022

June 27, 2022
Odisha’s Mo Bus

Odisha’s Mo Bus

June 25, 2022
Please login to join discussion

Our Offline Classroom Student

PRELIMS 2021 POLITY QUESTIONS ANALYSED

https://youtu.be/5q8hBcRGhAs

PRELIMS 2021 HISTORY QUESTIONS ANALYSED

https://youtu.be/v0SIZ7SUybg

CONGRATULATIONS TO 2021 TOPPERS !!!

Rank 171 Kumar Shivashish
Rank 250 Sahithya
Rank 263 Sumit Kumar Thakur
Rank 311 Deepak Ramachandra Shet
Rank 455 Ravinandan B M

July 2022
MTWTFSS
 123
45678910
11121314151617
18192021222324
25262728293031
« Jun    

Browse by Category

  • Agriculture
  • Disaster Management
  • Economy
  • Environment
  • Ethics
  • Foreign Affairs
  • Geography
  • Governance
  • History
  • Law & Policy
  • Opinion
  • People in News
  • Places in News
  • Science & Tech
  • Security
  • Society
  • Sports
  • Uncategorized

Browse by Tags

AIR BBC Business Standard CNN Deccan Herald DownToEarth Down to Earth DTE Economic Times ET GS-1 GS-2 GS-3 GS-4 Hindustan Times IE India & the world Indian express India today Indiatoday Kurukshetra LiveMint Mains News Newspaper News Paper PIB PIB & The Hindu pre Prelims PRS India RSTV Science Reporter Survey The Hindu The Hindustan Times The India Express The Indian Express The New Indian Express Times of India TOI TOPPERS UNDP website Wikipedia Yojana
JournalsOfIndia

Our vision is to orient the readers to grasp the facts objectively and analyse critically. In the rush of reaching first to the readers, the websites miss the balanced opinion, which is the need of the hour. We aim to reach the readers with more crispness, preciseness and relevance. We bring the articles in UPSC way for the civil services aspirants and the Wisest Way for general readers.

Categories

  • Agriculture
  • Disaster Management
  • Economy
  • Environment
  • Ethics
  • Foreign Affairs
  • Geography
  • Governance
  • History
  • Law & Policy
  • Opinion
  • People in News
  • Places in News
  • Science & Tech
  • Security
  • Society
  • Sports
  • Uncategorized

Browse by Tag

AIR BBC Business Standard CNN Deccan Herald DownToEarth Down to Earth DTE Economic Times ET GS-1 GS-2 GS-3 GS-4 Hindustan Times IE India & the world Indian express India today Indiatoday Kurukshetra LiveMint Mains News Newspaper News Paper PIB PIB & The Hindu pre Prelims PRS India RSTV Science Reporter Survey The Hindu The Hindustan Times The India Express The Indian Express The New Indian Express Times of India TOI TOPPERS UNDP website Wikipedia Yojana

Newsletter

The most important UPSC news and events of the day.

Get Journals daily newsletter on your inbox.

© 2020 JournalsOfIndia - A free initiative by Manifest Team.

  • Login
  • Sign Up
  • Home
  • SNIPPETS
  • ARTICLES
  • BROWSE
  • DOWNLOADS
No Result
View All Result

© 2020 JournalsOfIndia - A free initiative by Manifest Team.

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In