Money Rates in India from 2000-01to 2012-13

Money Rates in India during the period from 2000-01to 2012-13 have shown ups and downs reflecting the prevailing domestic and global economic conditions. Bank rate is the rate at which RBI lends funds to the banks and in a way; it determines the cost of funds in the Indian Economy. RBI Bank rate was on a downward trajectory during 2000-01 to 2003-04. Bank rate declined from 7.00% in 2000-01 to 6.00% 2003-04. Thereafter, it remained stable at 6.00% during 2003-04 to 2010-11. It rose to 9.50% in 2011-12, which contributed to the slowing down of economy and growth. It declined to 8.50% in 2012-13. Advance rate has shown a somewhat similar trend.

Call/Notice Money rate is the rate at which Banks and Financial Institutions lend and borrow funds to/from each other for short periods in the Money Market. It reflects the liquidity (availability of money/funds) in the system and determines the short term cost of funds. Call/Notice Money rate has inherent volatility and fluctuates widely as per the demand and supply conditions of the funds in the money market. However, as a long term trend, it shows correlation, though not of high degree, with Bank rate or the policy rates determined by the central bank of the country. It showed downward trend during 2000-01 to 2003-04. Call/Notice Money rate declined from 9.15% in 2000-01 to 4.62% 2003-04. Thereafter, it was fluctuating. It rose to 7.22% in 2006-07. It declined to 3.24% in 2009-10; rose to 8.12% in 2011-12 and again declined to 4.00% in 2012-13.

Note: 1. Data as on 31st March. 2. Advance Rate relates to SBI. 3. Data on lending rates relate to five major Public Sector Banks up to 2003-04.For the remaining years, the data relate to five major banks. 4. Data on lending rate relate to either Prime Lending Rate (PLR) or Benchmark Prime Lending Rate (BPLR) or Base Rate, as the case may be for the relevant year. 5. BPLR system effective November 2003 was replaced by the Base Rate System effective from July 1, 2010. Original Data Source: Reserve Bank of India and published in Statistical Year Book-2014 by MoSPI.