Economics • Banking & FinanceEasy
What does 'Reverse Repo Rate' signify?
A. The rate at which commercial banks park their excess liquidity with the RBI✓ Correct Answer
B. The interest rate charged by commercial banks to corporate borrowers
C. The penalty rate charged by RBI for CRR shortfalls
D. The rate of interest on government treasury bills
💡 Solution & Explanation
The reverse repo rate is the interest rate at which the central bank absorbs excess liquidity from commercial banking institutions within the economy. Wrong alternatives describe lending rates applied to corporate borrowers or penalty charges for statutory reserve shortfalls. Monetary policy instruments are vital concepts tested across banking and civil services examinations.
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