RBI Hikes Bank Rate to 9.5% for Urban Co-op Banks

The Reserve Bank of India (RBI) has hiked bank rate for Primary (urban) Co-operative Banks (UCBs) by 3.5% to 9.5% with effect from February 13, 2012.

“It has been decided that with effect from the close of business of 13 February 2012, the bank rate (for UCBs) will stand increased by 350 basis points, from 6% per annum to 9.50% per annum," RBI said in a notification.

The RBI repo rate currently stands at 8.5% while reverse repo rate is at 7.5%. Bank rate is the standard rate at which the Reserve Bank buys or re-discounts bills of exchange or other commercial paper. It is used as a penal rate which the banks have to pay for their failure to meet the mandatory Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

Earlier on 13 February 2012, RBI had increased the bank rate for all scheduled commercial banks to 9.5% from 6%, after a gap of nine years. The bank rate has been kept unchanged at 6% since April 2003.