Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsBANKING AND MONETARY POLICY2 Marks
Question
What is Repo Rate and Reverse Repo Rate?
✓
Answer
When commercial banks need funds for very short period $($For $1$ day, $7$ days, $15$ days, etc.$)$ they sell some securities which are held by them to $RBI$ with a repurchase agreement at a particular rate.
This rate is called Repo rate.
$RBI$ repurchases its securities from the commercial banks in the event when the $RBI$ has to borrow short term funds from the commercial banks by line up its securities with the commercial banks is called reverse repo rate.
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.