Question

When reverse repo rate is reduced,it_______
Discourages the commercial banks to park their surplus funds with RBI
Encourages the commercial banks to park their surplus funds with RBI
Both 1st or 2nd
Neither 1st nor 2nd​

Answer 1

Answer:

the commercial banks to park their surplus funds with RBI

Encourages the commercial banks to park their surplus funds with RBI

Both 1st or 2nd

Neither 1st nor 2nd

Answer 2

• Also, the Reverse Repo Rate is generally kept lower to discourage banks from keeping surplus funds with RBI as against lending them to individuals and businesses. Both the primary tools in RBI's Monetary and Credit Policy work in an opposite manner.