RBI hike of Bank rate to 9.5% is just technical in nature

RBI has recently increased the Bank rate to 9.5%. Bank rate had lost its importance in the Indian Banking parlance due to which RBI never bothered to touch this rate since last 9 years, it was untouched for the last nine years as it has no relevance and RBI has been controlling the interest rate through Repo and reverse repo mechanism. This rate hike cannot be seen as a monetary policy change as it is just a technical adjustment by RBI. RBI has been using the Bank rate as the Penal rate for Banks not able to maintain SLR and CRR .The MSF rate which is 100bps higher then Repo rate need to be aligned to the Bank rate . Bank rate has also been touched in the Companies Act 1956 in section 372. As per the Companies Act No Company can give any Interoperate Loan at an interest rate below the Bank rate. This rate hike will definitely impact those group Companies who were indulging in these transaction as now onwards they have to keep minimum 9.5% interest rate.