Question
Repo Rate and Reverse Repo Rate
| Points | Repo Rate | Reverse Repo Rate |
| 1. Meaning | It is the interest rate at which the central bank repurchases the Government Securities. | It is the interest rate at which commercial banks repurchase the Government Securities. |
| 2. Level | Repo Rate is always higher than Reverse Repo Rate. | Reverse Repo rate is always lower than Repo Rate. |
| 3. Initiative | It is carried out by the central bank. | It is carried out by a commercial bank. |
| 4. Current Rate | The current Repo Rate as of February 2020 is 5.15%. | The current Reverse Repo Rate as of February 2020 is 4.90%. |
| 5. Lender and Borrower | Here, the lender is RBI and Borrower is a commercial Bank. | Here, the lender is a commercial Bank and Borrower is RBI. |
| 6. Borrower’s objective | Its main objective is to manage short-term deficiency of funds. | Its main objective is to reduce the overall supply of money in the economy. |
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