the rate at which RBI lends to banks for short periods of time is known as..............?
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The terms “Repo Rate” and “Reverse Repo Rate” are often used in the banking sector. Repo rate is the interest charged by the RBI while repurchasing securities sold by commercial banks while reverse repo rate is the interest rate offered by the RBI to commercial banks depositing their excess funds in the central bank.
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Repo rate is a rate at which the central bank of a country lends money to the commercial banks. It is the Reserve Bank of India in our case.
Whenever the commercial banks undergo a fund crunch or shortage, it seeks the help of the RBI, it being the lender of the last resort.
The repo rate at times is even used as a measure for monetary control of inflation.
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