What is Repo Rate ?

Question

What is Repo Rate ?

Accepted Answer

Repo rate is the rate at which the central bank lends money to commercial banks.

Repo rate is set by the central bank to control inflation and stabilize the economy.
It is an instrument of monetary policy used to manage liquidity in the banking system.
When the repo rate is increased, borrowing becomes more expensive, leading to reduced money supply and lower inflation.
Conversely, when the repo rate is decreased, borrowing becomes cheaper, stimulating economic growth.
For example, if the repo rate is 5%, it means that commercial banks can borrow funds from the central bank at an interest rate of 5%.

Accepted Answer

Repo rate refers to the rate at which commercial banks borrow money by selling their securities to the Central bank of our country i.e Reserve Bank of India (RBI) to maintain liquidity, in case of shortage of funds or due to some statutory measures. It is one of the main tools of RBI to keep inflation under control.

Accepted Answer

Repo Rate is the rate at which commercial banks borrow the funds from the Reserve Bank Of India on selling the Govt. securities to maintain the liquidity of funds in the market.

What is Repo Rate ?

Top Kotak Mahindra Bank Assistant Officer interview questions & answers

Popular interview questions of Assistant Officer