Glossary:


Term - R : Repo Rate

Repo Rate


Repo Rate

Repo rate is the interest rate charged by RBI for overnight or short term lending to banks. Such lending is done on a secured basis by purchase and sale of securities - purchased by RBI on loan date and repurchased by the bank on repayment date. The effect is to improve the liquidity with the banking system when required by monetary policy objectives. If RBI accepts deposits from the banks to mop up surplus liquidity from the system, the rate at which the RBI does this is the reverse repo rate
Previous
Next