What do you mean by repo rate and reverse repo rate?
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Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation.Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country.
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Repo Rate : the rate at which the RBI offers short period loans to the commercial banks by buying the government securities in the open market is called Repo Rate.
Reverse Repo Rate : The rate at which the RBI accepts deposits from the commercial banks ( through government securities) is called Reverse Repo Rate
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