Interest rate floors are utilized in derivative.
Floor rate and ceiling rate of crr.
For example an adjustable rate mortgage may have an interest rate floor stating that the rate will not go below 3 5 even if the formula used to calculate the interest rate would have it do so.
An interest rate ceiling is the maximum interest rate permitted in a particular transaction.
For those quoting a fixed price for client projects there are two important things to know when it comes to setting a fair price for the work.
An interest rate floor reduces the risk to the bank or other party receiving the interest.
Your floor rate is the minimum rate you must charge to justify your time spent working on the project.
Cheap cake isn t good.
However the rbi amendment act 2006 provides for removal of the floor and ceiling with respect to setting the crr and authorizes the rbi to set the ratio in keeping with the broad objective of maintaining monetary stability in the economy.
Presently banks are not paid any interest on behalf of the rbi for parking the required cash.
An interest rate floor is an agreed upon rate in the lower range of rates associated with a floating rate loan product.
Your floor and ceiling billing rates.