Basis points avoid ambiguity when discussing rate changes. Because 1% = 100 basis points, saying a rate rose '25 bps' is clearer than '0.25%', which could be confused with a 0.25% relative change. Bps are used across banking, bonds and lending.
Formula
1 basis point = 0.01% ; 100 basis points = 1%
lightbulb
Example
If the RBI raises the repo rate by 25 bps, it increases from 6.25% to 6.50%.
info
Relevant NISM series
IBPS PORBI Grade BCFA
See Basis Point (bps) in exam questions
1,200+ NISM practice questions. Free to start.