RBI to charge repo rate for loans to state cooperative bank

KOLKATA: The Reserve Bank of India has decided to link the interest rate on loans and advances given to state coopoerative banks for general banking facilities like clearing adjustments or liquidity with the repo rate from October 1. Till date, state cooperative banks used to get this facility at bank rate, which was at one point considered as the benchmark rate. But the banking regulator has over a period of time made repo rate acceptable as the benchmark short term policy rate and this latest decision is a stap to this endeavour. At present, the repo rate stands at 8.25% while the bank rate has been at 6% for quite some time. In effect, state cooperative banks have to pay 225 basis points more interest for availing themselves of the facility.

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