Here is another set of bank terminology for the various bank interviews and exams. SLR Rate, Bank rate, Inflation, Deflation are prpoerly explained in this column.
1. What is SLR Rate?
Every bank needs to maintain a certain amount of funds ( cash, gold, government approved securities) before they can legally give loans or credits to its customers.This is called statutory liquidity ratio.
This rate is fixed by the reserve bank of India to control the expansion of loans.You may want to know how the reserve bank determines the SLR rate.Actually SLR is determined as the % of total demand and time liabilities.
These are the liabilities that the banks are supposed to pay the customers any time whenever they ask.
SLR is also a monetary regulation tool used by the reserve bank for controlling the monetary system in the country effectively.
2. What is Bank Rate?
Bank rate is also called as the discount rate.It is in fact the interest rate charged by the central bank when giving loans to the commercial banks.Remember that it is different from the Repo rate.
This rate is also an effective monetary regulation tool used by the reserve bank of India.
3. What is Inflation?
This is one common term which is can be seen in the newspapers on every day basis.
It is the increase in the prices of goods and services in the economy.When the normal prices of goods increases, generally the economy can be said to be inflating. Actually this happens when there is more demand and less supply. In such a case the existing goods will be rated high and the general prices of such goods increases.
4. What is Deflation?
This is just the opposite of inflation. Here the prices of goods ad services comes down continuously.Here you can also infer that there will be more supply and less buyers. Hence the general value of the goods gets reduced and even the goods will be sold below their market rates.
If you have any doubts regarding any of these topics mentioned above please coment your doubts and opinion in the coments below. But do not write your emai id in the comments.
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