what is bank rate in india

The bank rate in India is the rate at which the Reserve Bank of India (RBI) provides loans to commercial banks without keeping any security. It is the minimum rate of interest charged by the central bank for lending funds to commercial banks. When the bank rate is increased by the central bank, a commercial bank’s borrowing costs hike, which reduces the supply of money in the market. The bank rate is determined by the RBI and is usually higher than the repo rate. As of March 2021, the Bank Rate in India is 4.25% .