For instance, with the repurchase rate currently at 13,5 per cent, banks tend to offer around 12 per cent per annum on one-year fixed deposits while their prime overdraft rate amounts to 17 per cent per annum. The repurchase rate gets its name from the fact that the Reserve Bank only lends out funds against good security.
The rapid growth of emerging economies, which contrasts sharply with the weak momentum for recovery in advanced economies, continues to lure capital from investors seeking higher returns.4 The inflows appear to have been amplified by the continued large-scale monetary easing in advanced economies as well as the fixed or semi-fixed exchange rate regimes adopted by some emerging economies with the aim of keeping their currencies from appreciating.