Economics • Banking & FinanceEasy
What is 'Repo Rate' in the context of the monetary policy of the Reserve Bank of India?
A. The rate at which commercial banks lend long-term funds to retail customers
B. The rate at which the RBI lends short-term money to commercial banks against government securities✓ Correct Answer
C. The interest rate paid by commercial banks on savings bank deposits
D. The rate charged by banks for inter-bank overnight borrowings
💡 Solution & Explanation
The repo rate is defined as the interest rate at which the Reserve Bank of India provides short-term liquidity to commercial banks against the collateral of government securities. It differs from the bank rate, which applies to longer-term lending, or deposit rates offered to retail customers. Monetary policy instruments managed by the central bank form a core area of economic questions.
More Economics Banking & Finance questions
- Which statutory body in India regulates and develops the micro, small, and medium enterprise financing…
- Which of the following entities is eligible to establish a 'Small Finance Bank' in India?
- What distinguishes Treasury Bills from dated government securities in the Indian financial market?
- How are Non-Performing Assets officially classified by commercial banks if a borrower fails to make interest…
- Which organization in India operates the Unified Payments Interface (UPI) and the Immediate Payment Service…