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RBI Bank Rate current 2024 – MSME laws

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RBI Bank Rate current 2024 – MSME Notes by NB Associates

The Reserve Bank of India (RBI) is India’s central banking institution, responsible for regulating the country’s monetary policy. Among its many tools, the RBI bank rate is a crucial parameter. It influences the cost of borrowing and lending in the financial system.

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RBI Bank Rate current

As of November 2024, the RBI bank rate current stands at 6.75%.

Last change in RBI Bank rate was on Feb, 2023 vide circular / notification RBI/2022-23/174 DOR.RET.REC.101/12.01.001/2022-23. It was notified on date February 8, 2023. On this date the Bank Rate is revised upwards by 25 basis points from 6.50 per cent to 6.75 per cent with immediate effect.

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What is the RBI Bank Rate?

The bank rate is the interest rate at which the RBI lends money to commercial banks without any collateral for the long term. Bank rate is different from repo rate. Repo rate influences short-term borrowings with collateral. Bank rate often signals the overall interest rate environment. When the RBI increases the bank rate, borrowing from the central bank becomes costlier for commercial banks, leading to a cascading effect of higher interest rates in the economy. Conversely, a reduction in the bank rate can encourage borrowing and stimulate economic activity.

How RBI Bank Rate is connected is MSME Laws?

In case of delayed payment by the Buyer to the Supplier, section 16 of the MSMED Act, provides for the payment of compounding interest (monthly rest) at the rate which is 3 times of the RBI current bank rate.