What is the meaning of repo rate and reverse repo rate?
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The significant difference between the Repo Rate and Reverse Repo Rate is that Repo Rate is the interest rate at which the commercial banks borrow loans from RBI, while Reverse Repo Rate is the rate at which the RBI borrows loan from the commercial banks. The Repo Rate is always higher than the Reverse Repo Rate.
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The repo rate and reverse repo rate is used to control the money flowing in our country. The repo rate refers to the interest rate of the money loaned to commercial banks by Reserve Bank of India. RBI increases or decreases the repo rate to control the flow of money. The reverse repo rate also denotes the interest of the money lend to RBI by other banks. Both repo and reverse repo rate is to control the flow of money and decided by Reserve Bank of India according to the status of economic conflict in our country.
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